Indian Finance Minister, Nirmala Sitharaman, has released the country’s latest Budget proposing a slew of tax measures.Continue Reading
Sitharaman’s ‘Amrit Kaal’ Budget proposes key tax changes
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Transfer pricing news, BEPS news, and international tax news in India
Overview of Transfer Pricing in India
By CA. Akshay Kenkre (Founder and Practice Lead, TransPrice Tax Advisors LLP, India)
Introduction
The Indian transfer pricing regulations were enacted via the Indian Finance Act 2001 by introducing a separate code under Sections 92 to 92F of the Income- tax Act , 1961 (‘the Act’) read with Income- tax Rules, 1962 (‘the Rule’s) 10A to 10ETHD. The regulations are largely and principally based on OECD guidelines and describe the various transfer pricing methods, requirement for transfer pricing documentation, and contain penal provisions for non-compliance. The Indian regulations deal with intra-group transactions and is applicable from April 1, 2001.Continue Reading
US suspends digital services tax retaliatory tariffs
On June 2, 2020, USTR initiated investigations into digital services tax adopted or under consideration in ten jurisdictions: Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the UK.Continue Reading
Global minimum corporate tax rate should be 15 percent: US Treasury
The US Treasury expressed its belief that the international tax architecture must be stabilized, that the global playing field must be fair, and that we must create an environment in which countries work together to maintain our tax bases and ensure the global tax system is equitable.Continue Reading
Parity for All? Delhi High Court upholds trigger of MFN clause, bats for ‘common interpretation’ of Tax Treaties
By Aditi Sharma (Partner, Khaitan & Co, India) & Krutika Chitre (Principal Associate, Khaitan & Co, India)
The Delhi High Court in its recently pronounced decision in the case of Concentrix Services Netherlands BV WP (C) 9051/2020 and Optum Global Solutions International BV WP (C) 882/2021 invoked the ‘Most Favoured Nation’ (MFN) clause under the India-Netherlands double taxation avoidance agreement (Tax Treaty) and applied a reduced 5% withholding rate on dividend income paid by Indian companies to Dutch shareholders.
New UN transfer pricing manual released
The Manual is focused on transfer pricing in a global environment, while it provides guidance on design principles and policy considerations. It also addresses the practical implementation of a transfer pricing regime in developing countries and shares examples of country practices from developing countries, such as Brazil, China, India, Kenya, Mexico, and South Africa.Continue Reading
Digital services taxes of Austria, Spain and UK discriminatory: United States
In a release issued on January 14, the USTR said that the each one of these digital services taxes discriminates against US companies, is inconsistent with prevailing principles of international taxation, and burden or restricts US commerce.Continue Reading
Indian, Italian and Turkish digital service tax discriminatory: US Trade Representative
US Trade Representative has published findings on digital service tax in India, Italy, and Turkey calling it discriminatory and burdensome.Continue Reading
Shackling the FTAs by New Rules of Origin
By Ajinkya Gunjan Mishra (Partner, L&L Partners) & Avani Tewari (Associate, L&L Partners).
International trade and commerce are critical to sustaining the economic development of a country. To attain high growth momentum, a Country must engage in trade negotiations and agreements at multilateral, regional, and bilateral levels. India has been a party to several bilateral and regional trade agreements, and quite a few important ones are under negotiations and slated to be finalised soon.
However, India’s experience with the trade agreements has so far been mixed: favourable trade balance mostly in the case of smaller partners, and deficit with the larger ones. This coupled with the fact that trade agreements have been misused by availing preferential duty rate against the import of goods that did not meet the originating criteria have only added to the government’s list of concerns.
India-Mauritius Tax Treaty Benefits Denied – Controversy Continues
By Nishit Parikh (Partner, Sudit K Parekh & Co LLP, India)
India-Mauritius Tax Treaty has had its fair share of controversy in India. This saga continues even today, as recently Authority for Advance Ruling (‘AAR’) in India rejected a Foreign Private Equity player’s claim for Tax Treaty benefit considering the entire arrangement to be for tax avoidance.Continue Reading
US Trade Representative to investigate digital services tax rules in EU, nine others
These ten trading partners are: Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom.Continue Reading
Equalisation Levy in India
By Lokesh Shah (Partner, L&L Partners, New Delhi) & Devashish Poddar (Advocate, L&L Partners, New Delhi)
Technology, considered as a factor of production, has virtually been adopted in all sectors of the economy in order to enhance productivity, enlarge market reach, and reduce operational costs. The adoption of technology is demonstrated by the spread of broadband connectivity in businesses, which in almost all countries of the Organisation for Economic Co-operation and Development (“OECD”) is universal for large enterprises and reaches 90% or more even in smaller businesses.Continue Reading
Customs valuation and related party transactions
By Shilpa Goel (Tax Lawyer, India)
I am currently working on a case that involves questions of huge significance when it comes to related-party transactions and customs valuation. It is always good to begin with a caveat and I have two. The first is that the import in question pertains to the years 2002-2006, when the Indian custom valuation rules were somewhat different (from what they are now). The second is that I will not comment on the exact merits of the case but provide a broad overview of the legal and practical side of things.Continue Reading
How international tax landscape changes in India from April 1, 2020
By Ritu Shaktawat (Partner, Khaitan & Co, India) Raghav Kumar Bajaj (Principal Associate, Khaitan & Co, India)
India’s Union Budget for the fiscal 2020-21 was announced in February 2020 and the tax proposals, after undergoing some important changes, were approved by the Indian Parliament and received Presidential assent on March 27, 2020. With this, the annual exercise of amending India’s tax law was completed, and the tax changes are effective from April 1, 2020.
On the tax front, some significant amendments have been made – such as widening the scope of digital tax, abolition of dividend distribution tax, more stringent tax residency rules for non-resident Indians etc.
We have analyzed here the key international tax changes impacting non-residents (MNEs and others having Indian business or nexus).Continue Reading
India approves tax treaty with Chile
The tax treaty and Protocol implement the BEPS minimum standards to tackle tax planning strategies that exploit gaps and mismatches in tax rules.Continue Reading
Another MNC under the ‘Permanent Establishment’ scanner in India
By Ritu Shaktawat (Partner, Khaitan & Co, India) and Sneh Shah (Senior Associate, Khaitan & Co, India)
Delving into Hong Kong’s New Transfer Pricing Landscape
By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Principal, Transfer Pricing Services, SKP Group)
On July 4, 2018, Hong Kong’s Inland Revenue Department passed the country’s final Inland Revenue (Amendment) (No. 6) Bill 2017, (the Amendment Bill).
This Amendment Bill (which became law on July 13, 2018) specified the documentary requirements from a transfer pricing perspective and also introduced measures to address various recommendations under BEPS Action Plans.Continue Reading
Indian tax authority sets new CbC reporting deadline for US subsidiaries
By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)
In India, the 2016 Finance Act introduced a three-tiered transfer pricing documentation regime with a view to aligning the Indian transfer pricing documentation rules with Action 13 of the OECD’s base erosion and profit shifting (BEPS) project.
Accordingly, Indian subsidiaries of multinational groups were required to comply with new “master” and “local” files requirements and a new country-by-country reporting requirement from the 2016-17 financial year.Continue Reading
Indian tax authority undergoing ratification process for BEPS MLI
Important process of ratifying the BEPS MLI is on. In 2019-2020, the provisions will come into effect, says Akhilesh Ranjan.
Continue ReadingIndia, Hong Kong tax treaty to take effect from April 2019
The tax treaty provides for a low withholding tax rate of five percent for dividend payments. Interest, royalties, and fees are subject to a low withholding tax rate of ten percent.Continue Reading
India, China Sign Tax Treaty Protocol to Implement BEPS Minimum Standards
India has signed a Protocol to amend its tax treaty with China.
The Protocol incorporates changes required to implement tax treaty-related minimum standards agreed under the base erosion and profit shifting (BEPS) project.
Continue Reading
Indian Tax Tribunal Allows Claim of Expenses by Mauritian PE
By Ritu Shaktawat (Partner, Khaitan & Co, India) and Shabnam Shaikh (Principal Associate, Khaitan & Co, India)
In a decision delivered on October 5, India’s Income Tax Appellate Tribunal, New Delhi ruled that the Indian Income Tax Act cannot limit the claim of expenses of a permanent establishment in the absence of such limitation in the India-Mauritius tax treaty.Continue Reading
Mutual Agreement Procedure Statistics Published for 2017
The OECD on October 10 published its 2017 mutual agreement procedure (MAP) statistics covering 85 tax jurisdictions.
According to the 2017 MAP statistics, new transfer pricing MAP cases are up by 25 percent and other MAP cases by 50 percent. Anecdotal evidence suggests that the increase in new MAP cases is due to a range of factors including the effects of the new reporting framework and increased awareness of and expectations from taxpayers about MAP, the OECD noted.Continue Reading
India Concluding More Bilateral Advance Pricing Agreements
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Indian tax authority, Central Board of Direct Taxes, has published its second annual report on advance pricing agreement (APA) highlighting the progress made in 2017-18.Continue Reading
Indian Tax Authority Extends ‘Significant Economic Presence’ Consultation Deadline
India’s tax authority has extended the earlier deadline of August 10 to submit comments on the newly introduced “significant economic presence” test to tax profits of foreign businesses.Continue Reading
India’s CBDT Signs More APAs
India’s Central Board of Direct Taxes (CBDT) entered into nine new unilateral advance pricing agreements (APAs) in July 2018, the tax authority has announced.Continue Reading
‘Significant Economic Presence’ – Missing Pieces of the Indian Tax Puzzle!
By Ritu Shaktawat (Associate Partner, Khaitan & Co, India) and Krutika Chitre (Associate, Khaitan & Co, India)
Ritu Shaktawat and Krutika Chitre of Khaitan & Co discuss the consultation document addressing the tax challenges of digital economy released by Indian’s Central Board of Direct Taxes on July 13, 2018.
Soon after having introduced ‘Google Tax’ in 2016, India becomes one of the first tax jurisdictions to treat ‘significant economic presence’ of a foreign enterprise as its taxable presence in India (effective from April 1, 2018 (that is, from assessment year 2019-20)).Continue Reading
Taxpayer Input Sought on Fresh Round of MAP Peer Reviews
The OECD is seeking taxpayers’ input for the sixth round of base erosion and profit shifting (BEPS) Action 14 Stage 1 peer reviews of eight new jurisdictions.Continue Reading
No Indian Permanent Establishment for Nokia, But Concerns Remain
By Daksha Baxi (Head of International Taxation, Cyril Amarchand Mangaldas) and Jyoti Anumolu (Associate, Cyril Amarchand Mangaldas)
India’s Income Tax Appellate Tribunal (ITAT) at New Delhi last month delivered a significant decision in the case of Nokia Networks OY (taxpayer) on the issue of whether it’s Indian subsidiary, Nokia India Private Limited (NIPL) (which was assigned installation contracts by the taxpayer or entered into independent installation contracts with customers) constituted a permanent establishment (PE) for the taxpayer.Continue Reading
Indian Tax Authority Signs Three New Unilateral APAs
India’s Central Board of Direct Taxes (CBDT) entered into three new unilateral advance pricing agreements (APAs) in the months of May and June 2018, the tax authority revealed.Continue Reading
India’s CbC Reporting Requirement Clarified
By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)
As an active participant in the OECD’s base erosion and profit shifting (BEPS) project, India has implemented nearly all the BEPS recommendations and has taken several steps to amend the country’s domestic tax laws appropriately. The Indian Finance Act, 2016 implemented BEPS Action Item 13 by introducing a three-tiered transfer pricing documentation structure and made it effective from the 2016-17 financial year.Continue Reading
Indian Tax Authority Consulting On BEPS Action 5 Changes
The Indian tax authority has published for public comments a draft Notification, which will implement the OECD’s proposals under Action 5 of the base erosion and profit shifting (BEPS) project.Continue Reading
Indian Cabinet Approves Tax Treaty with Iran
The Indian Government has approved the country’s tax treaty with Iran.
The tax treaty is in line with the ones entered into by India with other countries. The proposed treaty also meets tax treaty-related minimum standards proposed under the OECD’s base erosion and profit shifting project, in which India is participating on an equal footing.Continue Reading
Indian Tax Authority Enters Into More APAs
India’s Central Board of Direct Taxes (CBDT) entered into a further seven unilateral advance pricing agreements (APAs) in February 2018, taking the total number of APAs signed to 203.Continue Reading
India Gazettes Revised Tax Treaty With Kenya
On February 19, 2018, India gazetted a revised tax treaty with Kenya. The revised treaty was signed by both countries in July 2016.Continue Reading
New India, Iran Tax Treaty to Include BEPS Minimum Standards
India on February 17 signed a tax treaty with Iran. The treaty is similar to the ones entered into by India with other countries.Continue Reading
India Approves Protocol to Amend Tax Treaty with China
By Alex Cooper
On February 7, 2018, the Indian Government approved the signing and ratification of a protocol to amend the country’s tax treaty with China.Continue Reading
Indian Tax Authority Enters Into Two Further Bilateral APAs
On February 7, 2018, the Indian tax authority announced that it entered into two bilateral advance pricing agreements (APAs) in the month of January 2018.Continue Reading
Indian 2018 Budget Introduces Virtual PE Concept to Tax Business Profits
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
On February 1, 2018, India’s Finance Minister, Arun Jaitley, issued the country’s 2018 Budget, which introduces a new permanent establishment (PE) nexus based on virtual economic presence to tax business profits of foreign enterprises.Continue Reading
Indian Budget 2018: Transfer Pricing Expectations
By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)
The Indian Government has, in recent past, taken bold and practical measures to align the Indian transfer pricing regulations with global best practices by introducing country-by-country reporting and “master” file regulations; interest limitation provisions; revising the rates under the safe harbor rules; rationalizing specified domestic transactions; and introduction of range concept and use of multiple-year data. Additionally, the Government has made several attempts on the administrative side to reduce litigation and introduce a taxpayer-friendly regime. Having said that, there are certain ambiguities that need to be resolved.
In the 2018 Budget, which is due to be presented on February 1, 2018, we hope to see appropriate steps being taken to address these ambiguities, some of which are listed below.Continue Reading
Hitesh Gajaria to join KPMG India as Tax Head
KPMG India to newly appoint Hitesh Gajaria as Head of Tax from April 2018. Gajaria will succeed Girish Vanvari.
Indian IT Giant Infosys Signs APA with US
Indian IT giant Infosys Limited has announced the successful conclusion of an advance pricing agreement (APA) with the US Internal Revenue Service (IRS), a move that will enhance predictability of the company’s tax obligations in respect of its US operations.Continue Reading