Significant changes in the 2016 US Model Income Tax Convention
|
|
- Samantha Arnold
- 5 years ago
- Views:
Transcription
1 from India Tax & Regulatory Services Significant changes in the 2016 US Model Income Tax Convention February 22, 2016 In brief On 17 February, 2016, the US Treasury Department released a revised US Model Income Tax Convention (the 2016 Model) updating the 2006 US Model Income Tax Convention (the 2006 Model). Further, the US Treasury Department has stated that the Technical Explanation for the 2016 Model will be released this spring. Various Articles in the 2016 Model have been revised vis-à-vis the 2006 Model. Though most of the updates are expansions of existing Articles, a few recommendations by the OECD in the recently released BEPS Action Plans have also been incorporated. The 2016 Model is a finalised version of the draft provisions of May 2015 which were first put out by the US Treasury Department for public comments. In detail Updates Given the above, we have highlighted the significant changes in the 2016 Model: OECD recommendations in BEPS Action Plan reports adopted Preamble of the 2016 Model The 2016 Model has modified the preamble for tax treaties that clarifies the intention of the treaty partners, and is in line with the recommendations in the BEPS Action Plan 6. The revised preamble clarifies that the purpose of a tax treaty is the elimination of double taxation with respect to taxes on income, without creating opportunities for nontaxation or reduced taxation through tax evasion or avoidance (including treaty-shopping arrangements). Additional conditions for beneficial tax treatment for dividends in the Source State Under Article 10(2) of the 2006 Model, dividends paid by a resident of a Contracting State to a resident of another Contracting State were taxable in the Source State at a rate of 5%, provided the beneficial owner owns at least 10 percent of the voting stock of the company paying dividends. Under the 2016 Model, the following conditions need to be fulfilled for the twelve month period, ending on the date of entitlement of dividend, to avail the lower tax rate of 5%: o The beneficial owner has been a company resident of the other Contracting State or of a Qualifying Third State. A Qualifying Third State has been defined to mean a State having a comprehensive tax treaty with the Contracting State, in which the dividendpaying company is a resident and such a tax treaty allows the beneficial owner to benefit from a rate of tax lower than or equal to 5%; and o At least 10% of the aggregate voting power and value of shares of the payer company is directly owned by the beneficial owner or a Qualified Predecessor Owner. A Qualified Predecessor Owner
2 means a company from whom the beneficial owner acquired the shares and who: (i) is a connected person with respect to the beneficial owner; and (ii) is a resident of a State having a comprehensive tax treaty with the Contracting State, in which the dividend paying company is a resident and such tax treaty would have allowed the company to benefit from a rate of tax on the dividend which is lower than or equal to 5%. o Further, to determine the percentage of shares directly owned, any shares held by the company through an entity which is (i) considered fiscally transparent under the laws of the Contracting State, and (ii) not a resident of the Contracting State in which the payer company is a resident, will be considered as directly held by the company to the extent of the company s ownership in the entity. It should be noted that although BEPS Action Plan 6 recommended additional conditions for beneficial tax treatment of dividends in the Source State, the changes in the 2016 Model have gone beyond the recommendations of BEPS and have incorporated more stringent conditions. Splitting up of construction contracts in the context of Construction Permanent Establishment (PE) The 2016 Model contains a clause in Article 5 wherein, for determining whether the activities exceed the twelve-month threshold for Construction PE, (i) the activities carried on by the foreign enterprise during different periods that in total do not exceeding twelve months, and (ii) any connected activities carried on by the foreign enterprise or closely related enterprise, during different periods exceeding 30 days, shall be combined. Introduction of an arbitration clause in Mutual Agreement Procedure (MAP) In line with the recommendations of BEPS in Action Plan 14, the 2016 Model has incorporated an arbitration provision in the Article on MAP. Though the BEPS Action Plan 14 had not explicitly outlined the scope of this provision, the 2016 Model has incorporated detailed scope and the procedure to be followed in cases of arbitration. The key features of this provision are as follows: Any case pending before the Competent Authorities (CA) of both the Contracting States for resolution under MAP, inter alia, o for at least two years; o where the CAs are unable to reach an agreement; o where the case is suitable for resolution through arbitration, as per the CAs; or o where a case has not already been disposed of by any Court of either Contracting State; shall be resolved through arbitration. Detailed guidance has been provided for the constitution of the arbitration panel, including the procedure for resolution of the case through arbitration. The MAP, including the arbitration proceedings, shall automatically terminate if the case is disposed of by any Court of either Contracting State during the arbitration proceedings. The determination of the case post arbitration shall be binding on the Contracting States, if accepted by all the concerned persons (whose tax liability may be affected by mutual agreement) within 45 days of receipt of the determination; in the event of non-acceptance, the case shall not be eligible for any further consideration by the CAs under MAP. The time periods and procedures involved in the process of arbitration should be mutually preagreed to by the CAs before submission of the case for arbitration. Other significant changes Limitation on Benefits (LoB) clause Largely, the LoB clause recommended in BEPS Action Plan 6 was based on the LoB clause in the 2006 Model; however, the LoB clause of the 2016 Model has been substantially modified. Key changes made in the LoB clause in the 2016 Model are captured below: The conditions prescribed in the LoB clause are required to be fulfilled by the resident of a Home State ( tested entity ) at the time the benefit is accorded PwC Page 2
3 to such tested entity under the 2016 Model; this change is in line with the recommendation under BEPS Action Plan 6. The derivative benefit test that is, the test based on ownership and base erosion has been modified as follows: o Ownership test expanded to cases where the residents of the Home State eligible for benefits of the convention indirectly own more than 50 percent of the aggregate vote and value of shares or other beneficial interest in the tested entity through the residents of a Third State. However, such a Third State should have a comprehensive tax treaty with the Source State that has provisions similar to Special Tax Regimes (STR) and notional deductions of interest. The 2016 model has defined the term STR to mean any statute, regulation or administration in a state, with respect to taxes covered by the tax treaty that satisfies all of the prescribed conditions. o The base erosion test, further restricted to incorporate the principles of STR/ notional deductions in cases of interest payments, that is, the payments to connected persons that benefit from STR/ notional deductions with respect to payments which are tax deductible in the Home State, should be less than 50 percent of the tested company s and tested group s 1 gross income 1. o In case the tested entity is a subsidiary of a company listed on a recognised stock exchange 1, which would have otherwise qualified under the ownership test, it has to also satisfy the base erosion test. o The derivative benefit test has been extended to tested entities, being a company in which at least 95% of the aggregate vote and value of shares or other beneficial interest is held directly or indirectly by seven or less equivalent beneficiaries. Equivalent beneficiaries are defined to include the following persons, with certain exceptions (like individuals taxable at fixed rate of tax or involvement of fiscally transparent entities): (i) Third State residents who satisfy specific conditions of the LoB clause. (ii) With respect to interest, dividends or royalties income for which benefit is sought, the Third State residents would be chargeable for tax at a rate lower than or equal to the rate applicable to the tested entity under the 2016 Model. (iii) With respect to business profits, gains and other income for which benefit is sought, the Third State 1 Defined under the revised model residents would be entitled to benefits at least as favourable as those for the tested entity under the 2016 Model. (iv) Residents of the Home State who are entitled to benefits under the 2016 Model, based on the LoB clause. (v) Resident of the Source State who are entitled to benefits under the 2016 Model based on the LoB clause. However, such Source State residents should not, together, own more than 25 percent of the aggregate vote and value of shares or other beneficial interest in the tested entity. The active business test, that is, the test where income for which benefit is sought is tested against the active conduct of business or trade carried on by the tested entity in the Home State, is modified as follows: o Instead of income for which the benefit under the 2016 Model is sought, being derived in connection with or incidental to the active trade or business of the tested entity, the income has to emanate from or has to be incidental to active trade or business of the tested entity in the Home State. o In addition to investment companies, holding companies, companies engaged in administrative and supervisory functions PwC Page 3
4 for group companies and group financing companies, or a combination of these, are disqualified from the benefit of the active business test. A headquarter company test has been introduced under the 2016 Model. A company otherwise not qualified for the benefit of the 2016 Model would be qualified to take the benefit of the 2016 Model solely for interest and dividend income received from the members of its multinational corporate groups, if it qualifies as a headquarter company. A company which functions as a headquarter company for a multinational corporate group consisting of its direct and indirect subsidiaries and satisfies the following conditions is regarded as a headquarter company: o Company s primary place of management and control 1 is in the Home State. o The multinational corporate group should consist of companies resident in at least four states/ group of states and engaged in active conduct of a trade or business in such countries/ group of states. o Gross income 1 of the group should be at least 10% from each of such states/ group of states. o Gross income 1 from any one state (other than the Home State of the Headquarter State) should be less than 50 percent. o Gross income 1 of the Headquarter State from the Source State should not exceed 25 percent. o The Headquarter State is subject to the same taxation laws in the Home State which are applicable to companies that are actively conducting trade or business, that is, such a state does not have a special tax regime for such Headquarter States. o The Headquarter State has to satisfy the modified base erosion test discussed above. Under the revised principal purpose test, the tested entity, in addition to demonstrating the fact that the principal purpose for its existence is not to obtain benefits of the 2016 Model, has to also demonstrate a substantial non-tax nexus to its Home State. Further, the CAs have to consult each other before accepting or denying the grant of benefit under this clause. The tie breaker rule in the case of companies Under Article 4(4) of the 2006 Model, provided if a company is a resident of both Contracting States, it shall be deemed to be a resident of the Contracting State in which it was organised. In all other cases involving dual residency, the authorities shall mutually determine the Contracting State in which the company will be treated as a resident. However, if the authorities do not reach a conclusion, the company will not be treated as a resident of either Contracting States. Article 4(4) of the 2016 Model now provides that if a company is a resident of both the Contracting States, such company shall not be treated as a resident of either Contracting States for claiming treaty benefits. Adjustment to profit attributable to PE Article 7(3) of the 2016 Model provides that where a Contracting State adjusts the profits attributable to a PE of an enterprise of one of the Contracting States and accordingly taxes profits which have been taxed in the other Contracting State, the other Contracting State shall eliminate double taxation by making an appropriate adjustment, if it agrees with the adjustment made by first Contracting State. If the other Contracting State does not so agree, the Contracting States shall eliminate double taxation by mutual agreement. Changes in the Article on Dividend, Interest and Royalty Special provision for payments by expatriated entities o The 2016 Model states that dividend, interest or royalties paid by an expatriated entity in the US and beneficially owned by a company resident in other specified Contracting States, where the payer and payee are connected persons, will be taxed in accordance with the laws of the US for a period of 10 years from the date of acquisition of the domestic entity. o The definition of expatriated entity has to be considered as per the domestic laws of the US. o Certain exceptions to the above provision have been provided. Taxability of dividend, interest and royalty payments in case of nonfulfilment of LoB clause PwC Page 4
5 o In case a tested entity is not able to fulfil the condition(s) under the applicable LoB clause with respect to a dividend, interest or royalty because it does not fulfil the requirement of being held by equivalent beneficiaries, such tested entity will be taxed in the Source State and as per the laws of that State. o However, the tax rate shall not exceed the highest of the rates to which the persons who do not qualify as equivalent beneficiaries would have been entitled to if such persons had received the dividend/ interest/ royalty directly. Taxability of interest and royalty in case of STR In case the interest or royalty is received by a resident of a Contracting State who benefits from an STR with respect to such interest or royalty in its Residence State, the interest may be taxed in the State in which it arises, in case the payer is a connected person with the recipient. Taxability of interest in specific cases o In case the interest is received by a resident of a Contracting State who benefits at any time during the taxable year in which interest is paid from notional deductions with respect to amounts that the residence State treats as equity, the interest may be taxed in the Source State in case the payer is a connected person with the recipient. o In case the interest is received by a beneficial owner who is resident of a Contracting State and is entitled to the benefits of the Article on interest only by reason of the headquarter rule in paragraph 5 of Article 22, the interest may be taxed in the Source State but the tax shall not exceed 10% of the gross amount of interest. Impact of cessation of residence As per the domestic tax laws of some Contracting States, when an individual ceases to be a resident of that State, it is deemed that s/he has alienated her/ his property for its fair market value, and is taxed on such alienation. As per the 2016 Model, in such a case, for the purpose of taxation in other Contracting States, the individual can elect to be treated as having alienated the property and reacquired the same at fair market value. Exchange of information The 2016 Model incorporates a new provision whereby any information received by the CAs can be made available under the provisions of a mutual legal assistance treaty in force between the Contracting States, which allows for the exchange of tax information. Subsequent change in law The 2016 Model incorporates a new Article that pertains to subsequent changes in laws in the other Contracting States. This Article addresses a situation in which, after a tax treaty is signed between the US and the other Contracting States, one of the Contracting States either: o reduces overall corporate tax rate applicable to resident companies to lesser of 15 percent or 60 percent of the overall corporate tax rate applicable to resident companies in the other Contracting States; or o exempts all foreign sourced income of resident companies from taxation. In this situation, to ensure the elimination of double taxation without creating opportunities for double non-taxation, as well as to restore appropriate allocation of taxing rights between the two Contracting States, this Article requires tax treaty partners to consult and determine if any amendments to the relevant articles of their tax treaty are necessary. In case such consultation fails to progress, a tax treaty partner can issue a diplomatic note stating that it will cease to grant tax treaty benefits for certain foreign sourced income. The takeaways Although the 2016 Model has incorporated several changes to the 2006 Model, it has not considered the recommendations made by the OECD in its BEPS Action Plan 7 with respect to dependent and independent agents, and the exemption for preparatory and auxiliary activities. In this context, the preamble states that such recommendations shall be adopted in the tax treaties post negotiations and discussions between the countries. PwC Page 5
6 The 2016 Model has not addressed the issues raised by the OECD in BEPS Action Plan 1 with respect to taxation in the digital economy (e.g., issues such as characterisation, nexus and taxable presence). The insertion of the new Article 28 Subsequent Changes in Law, is a significant addition and it will be interesting to see, practically, how the countries consult and determine the need for amendments in their tax treaty, on account of beneficial tax treatment to residents under domestic laws. Although the LoB clause in the 2016 Model is very extensive, it will be interesting to see how the countries incorporate such a clause in their tax treaties. The test for primary place of management and control has been provided for listed and companies and headquarter companies to qualify under the LoB clause. The definition of primary place of management and control lays emphasis on exercise of day-to-day responsibility for more of the strategic, financial and operational policy decisionmaking for the company and its direct/ indirect subsidiaries. At this stage, it will be relevant to compare this to the term, Place of Effective Management, introduced under Indian tax regulations, which lays emphasis on key management and commercial decisions that are necessary for the conduct of business of an entity as a whole. It will be interesting to see whether Indian tax regulators would import this term in Indian tax regulations/ treaties. It should be noted that the LoB clause in the BEPS report on Action Plan 6 is yet to be finalised by the OECD, and it remains to be seen whether the OECD incorporates the changes in the 2016 Model LoB clause in Action Plan 6. Let s talk For a deeper discussion of how this issue might affect your business, please contact: Tax & Regulatory Services Direct Tax Gautam Mehra, Mumbai gautam.mehra@in.pwc.com Rahul Garg, Gurgaon rahul.garg@in.pwc.com PwC Page 6
7 Our Offices Ahmedabad Bangalore Chennai President Plaza 1st Floor Plot No 36 Opp Muktidham Derasar Thaltej Cross Road, SG Highway Ahmedabad, Gujarat th Floor Millenia Tower D 1 & 2, Murphy Road, Ulsoor, Bangalore Phone Hyderabad Kolkata Mumbai Plot no. 77/A, /A/1, 4th Floor, Road No. 10, Banjara Hills, Hyderabad , Andhra Pradesh Phone & 57, Block DN. Ground Floor, A- Wing Sector - V, Salt Lake Kolkata , West Bengal / th Floor Prestige Palladium Bayan Greams Road Chennai PwC House Plot No. 18A, Guru Nanak Road(Station Road), Bandra (West), Mumbai Gurgaon Pune For more information Building No. 10, Tower - C 17th & 18th Floor, DLF Cyber City, Gurgaon Haryana th Floor, Tower A - Wing 1, Business Bay, Airport Road, Yerwada, Pune Contact us at pwctrs.knowledgemanagement@in.pwc.com About PwC At PwC, our purpose is to build trust in society and solve important problems. We re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at In India, PwC has offices in these cities: Ahmedabad, Bangalore, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India's service offerings, visit PwC refers to the PwC International network and/or one or more of its member firms, each of which is a separate, independent and distinct legal entity in separate lines of service. Please see for further details PwC. All rights reserved For private circulation only This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwCPL, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. Without prior permission of PwCPL, this publication may not be quoted in whole or in part or otherwise referred to in any documents PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity.
Central Government issues notification for implementation of POEM based taxation for foreign companies
from India Tax & Regulatory Services Central Government issues notification for implementation of POEM based taxation for foreign companies July 2, 2018 In brief The Central Government vide notification
More informationOECD releases 2017 update to the Model Tax Convention
from India Tax & Regulatory Services OECD releases 2017 update to the Model Tax Convention November 28, 2017 In brief The OECD has released the 2017 update to the Model Tax Convention and the related Model
More informationFinal notifications issued under section 115JG(1) for conversion of Indian branch of foreign bank into an Indian subsidiary company
from India Tax & Regulatory Services Final notifications issued under section 115JG(1) for conversion of Indian branch of foreign bank into an company December 11, 2018 In brief The Reserve Bank of India
More informationAPA roll back rules announced
from India Tax & Regulatory Services APA roll back rules announced March 17, 2015 In brief Provisions relating to Advance Pricing Agreements (APAs) were introduced in the Indian Income-tax Act, 1961 (the
More informationGovernment notifies valuation rules and timelines for one-time compliance window under Black Money Taxation Act
from India Tax & Regulatory Services Government notifies valuation rules and timelines for one-time compliance window under Black Money Taxation Act July 7, 2015 In brief The Black Money (Undisclosed Foreign
More informationGovernment issues another set of FAQs on one time compliance window scheme of The Black Money Taxation Act, 2015
from India Tax & Regulatory Services Government issues another set of FAQs on one time compliance window scheme of The Black Money Taxation Act, 2015 September 11, 2015 In brief The Black Money (Undisclosed
More informationBusiness support/marketing support activities undertaken by Indian subsidiary do not create a PE in India for the foreign company
from India Tax & Regulatory Services Business support/marketing support activities undertaken by Indian subsidiary do not create a PE in India for the foreign company June 20, 2018 In brief The Authority
More informationAmendments to the Finance Bill, 2018 as passed by the Lok Sabha
from India Tax & Regulatory Services Amendments to the Finance Bill, as passed by the Lok Sabha March 16, In brief The Finance Bill, (Bill) was passed by the Lok Sabha on 14 March, with 18 amendments in
More informationTax Insights. from India Tax & Regulatory Services. In brief. In detail. October 31, 2017
from India Tax & Regulatory Services SC ruled that no PE of a foreign company can be formed in India where its Indian subsidiary is performing support services, which enables such foreign company to render
More informationNotification issued under section 112A specifying modes of acquisition not covered
from India Tax & Regulatory Services Notification issued under section 112A specifying modes of acquisition not covered October 12, 2018 In brief The Finance Act, 2018 withdrew the exemption provided under
More informationMere presence of a subsidiary and virtual projection of the enterprise in India, absent other relevant factors No PE in India
from India Tax & Regulatory Services Mere presence of a subsidiary and virtual projection of the enterprise in India, absent other relevant factors No PE in India June 28, 2018 In brief The Special Bench
More informationAmendments to Foreign Portfolio Investors Regulations to incorporate recent changes on eligibility criteria, clubbing of investment limits and others
from India Tax & Regulatory Services Amendments to Foreign Portfolio Investors Regulations to incorporate recent changes on eligibility criteria, clubbing of investment limits and others January 7, 2019
More informationSEBI releases amended REIT and InvIT Regulations
from India Tax & Regulatory Services SEBI releases amended REIT and InvIT Regulations December 2, 2016 In brief Post extensive public consultation and stakeholder deliberations, the Securities and Exchange
More informationMajor Reforms in Foreign Direct Investment Policy
from India Tax & Regulatory Services Major Reforms in Foreign Direct Investment Policy November 13, 2015 In brief With a view to boost the ease of doing business in India and to further promote 'Make in
More informationIncome-tax return forms for the financial year notified
from India Tax & Regulatory Services Income-tax return forms for the financial year 2017-18 notified April 9, 2018 In brief The Central Board of Direct Taxes (CBDT) has amended the Income-tax rules and
More informationDecoding the Model GST law Impact on the Pharma sector
www.pwc.in Decoding the Model GST law Impact on the Pharma sector June 2016 India on the brink of GST The current Indirect Tax regime in India provides for a complex tax environment due to multiplicity
More informationCBDT releases draft rules on CbCR and Master File requirements for public comments
from India Tax & Regulatory Services CBDT releases draft rules on CbCR and Master File requirements for public comments October 7, 2017 In brief The prolonged wait is finally over! Reiterating India s
More informationDecoding the Model GST law Impact on Telecom Companies
www.pwc.in Decoding the Model GST law Impact on Telecom Companies June 2016 India on the brink of GST There has been significant progress on the GST front recently. With the release of the draft Model
More informationDecoding the draft GST law Impact on Real Estate sector
www.pwc.in Decoding the draft GST law Impact on Real Estate sector June 2016 India on the brink of GST The current Indirect tax regime in India provides for a complex tax environment due to multiplicity
More informationUse of Berry ratio as PLI upheld
from India Tax & Regulatory Services Use of Berry ratio as PLI upheld August 3, 2015 In brief In a recent ruling, the Delhi Bench of the Income-tax Appellate Tribunal (Tribunal), placing extensive reliance
More informationSharing insights. News Alert 22 April Use of hotel rooms for the purpose of business could result in a permanent establishment. In brief.
www.pwc.in Sharing insights News Alert 22 Use of hotel rooms for the purpose of business could result in a permanent establishment In brief In a recent ruling 1, the Mumbai Income-Tax Appellate Tribunal
More informationVoluntary Retention Route for investment in Indian debt by Foreign Portfolio Investors
from India Tax & Regulatory Services Voluntary Retention Route for investment in Indian debt by Foreign Portfolio Investors March 4, 2019 In brief The Reserve Bank of India (RBI) with a view to attract
More informationSharing insights. News Alert 1 July CBDT issues revised guidance on contract R&D centres. Background.
www.pwc.in Sharing insights News Alert 1 CBDT issues revised guidance on contract R&D centres Background Almost three months ago, pursuant to the recommendations of the Rangachary Committee 1, the Central
More informationGST Council releases draft amendments to GST Laws for public comments
from India Tax & Regulatory Services GST Council releases draft amendments to GST Laws for public comments July 10, 2018 In brief The GST Council has released a set of draft amendments in the CGST Act,
More informationCarry forward and set off of unabsorbed losses permissible even if shareholding changes by more than 49%, so long as there is no change in control
Tax Insights from India Tax & Regulatory Services Carry forward and set off of unabsorbed losses permissible even if shareholding changes by more than 49%, so long as there is no change in control October
More informationTribunal decides on taxability of conversion of company into an LLP
from India Tax & Regulatory Services Tribunal decides on taxability of conversion of company into an LLP December 12, 2018 In brief In a recent ruling, 1 the Mumbai bench of the Income-tax Appellate Tribunal
More informationPwC ReportingInBrief. Amendments to Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance
PwC ReportingInBrief Amendments to Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance In brief The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting
More informationTribunal Special Bench rules on principle of base erosion
from India Tax & Regulatory Services Tribunal Special Bench rules on principle of base erosion July 20, 2016 In brief The taxpayer, a non-resident, advanced an interest-free loan to its wholly owned subsidiary
More informationThe applicant was to design the curtain wall and façade, supply all materials, erect, install, inspect, test and commission the entire subcontract
from India Tax & Regulatory Services Offshore supplies held on facts to be taxable in India in case of composite contract for supplies and services; supply transaction not completed outside India September
More informationSharing insights. News Alert 2 January, Amount paid to a non-resident net of taxes to be grossed up at the rates in force. In brief.
www.pwc.com/in Sharing insights News Alert 2 January, 2013 Amount paid to a non-resident net of taxes to be grossed up at the rates in force In brief In a recent case of Bosch Ltd 1 (the assessee), the
More informationPwC ReportingInBrief. Payment of Gratuity (Amendment) Act, 2018
PwC ReportingInBrief Payment of Gratuity (Amendment) Act, 2018 In brief On 29 th March 2018, Central Government notified the Payment of Gratuity (Amendment) Act, 2018 ( the Act ). The Act increases the
More informationIndian distributor of non-resident channel company not a PE; revenue from distribution of channels in India not taxable as royalty
from India Tax & Regulatory Services Indian distributor of non-resident channel company not a PE; revenue from distribution of channels in India not taxable as royalty August 17, 2016 In brief The Mumbai
More informationGeneral Anti- Avoidance Rules notification October 2013
General Anti- Avoidance Rules notification October 2013 2 PwC FAQs: GAAR notification dated 23 September 2013 What are the broad contours of the GAAR notification dated 23 September 2013? Since the contents
More informationPwC ReportingInBrief MAT Ind AS committee additional recommendations on main issues relating to first-time adoption
PwC ReportingInBrief MAT Ind AS committee additional recommendations on main issues relating to first-time adoption August 2016 www.pwc.in In brief The Central Board of Direct Taxes (CBDT) had issued an
More informationRegulations enabling Foreign Investment in Investment Vehicles (including AIFs, REITs and InvITs) notified
from India Tax & Regulatory Services Regulations enabling Foreign Investment in Investment Vehicles (including AIFs, REITs and InvITs) notified November 20, 2015 In brief The Reserve Bank of India ( RBI
More informationDraft Guidelines for Licensing of Small Banks and Payments Banks
from India Tax & Regulatory Services Draft Guidelines for Licensing of and Payments Banks 22 July 2014 In brief The Reserve Bank of India (RBI), recently released the much awaited draft guidelines for
More informationSharing insights. News Alert 28 February TPO not justified in recalculating royalty based on his own interpretation of term, Net Sales.
www.pwc.in Sharing insights News Alert 8 TPO not justified in recalculating royalty based on his own interpretation of term, Net Sales In brief In a recent ruling 1, the Pune Income-tax Appellate Tribunal
More informationDecoding the Model GST law Impact on Automobile sector
www.pwc.in Decoding the Model GST law Impact on Automobile sector June 2016 India on the brink of GST The current Indirect tax regime in India provides for a complex tax environment due to multiplicity
More informationDecoding the draft GST law Impact on Aviation sector
www.pwc.in Decoding the draft GST law Impact on Aviation sector June 2016 India on the brink of GST India finally seems to be on the cusp of implementing the much-awaited tax reform of Goods & Services
More informationSharing insights. News Alert 21 August, 2012
www.pwc.com/in Sharing insights News Alert 21 August, 2012 Transfer pricing, minimum alternate tax and filing of return applicable to capital gains earned by foreign company eligible for exemption under
More informationSharing insights. News Alert 13 February Revisionary powers available to CIT invalid where AO adopts either perfectly correct or a possible view
www.pwc.in Sharing insights News Alert 13 Revisionary powers available to CIT invalid where AO adopts either perfectly correct or a possible view In brief In the case of Reliance Communications Ltd. 1
More informationCBEC issues notifications for amending tax rates on specified services
from India Tax & Regulaty Services CBEC issues notifications f amending tax s on specified services August 24, 2017 In brief The CBEC has issued notification nos. 20-23/2017-Central Tax (Rate) dated 22
More informationDecoding the Model GST Law Impact on Financial Services sector
www.pwc.in Decoding the Model GST Law Impact on Financial Services sector June 2016 India on the brink of GST India finally seems to be on the cusp of implementing the much-awaited tax reform of Goods
More informationSharing insights. News Alert 23 August, 2012
www.pwc.com/in Sharing insights News Alert 23 August, 2012 For attribution of profits to PE, AO cannot simply apply Rule 10 without rejecting TP study for proper reasons In brief The taxpayer, a project
More informationMutual agreement procedure Answering queries
www.pwc.in Mutual agreement procedure Answering queries What is a mutual agreement procedure (MAP)? MAP is an alternative available to taxpayers to resolve disputes giving rise to double taxation, whether
More informationPwC ReportingInBrief. Transitioning to Ind AS 115, Revenue from contracts with customers
PwC ReportingInBrief Transitioning to Ind AS 115, Revenue from contracts with customers In brief The Companies (Indian Accounting Standards) Amendment Rules, 2018 issued by the Ministry of Corporate Affairs
More informationDecoding the Model GST Law Key features of the draft Model GST Law
www.pwc.in Decoding the Model GST Law Key features of the draft Model GST Law June 2016 India on the brink of GST The introduction of Goods and Services Tax (GST) has been one of the biggest tax reforms
More informationNews Alert* pwc. Tax & Regulatory Services. 2 March, *connectedthinking
Tax & Regulatory Services News Alert* 2 March, 2010 Taxability of consideration received upon assignment of rights and obligations under an assignment agreement - held to be business profits not taxable
More informationCompanies (Indian Accounting Standards) (Amendment) Rules, 2016
www.pwc.in Companies (Indian Accounting Standards) (Amendment) Rules, 2016 June 2016 News alert Background The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) (Amendment)
More informationSharing insights. News Alert 26 September, New Takeover Regulations Notified. 1. Threshold limits for open offer trigger.
www.pwc.com/in Sharing insights News Alert 26 September, 2011 New Takeover Regulations Notified The Securities and Exchange Board of India ( SEBI ) has notified the SEBI (Substantial Acquisition of Shares
More informationCBIC issues notifications and orders to give effect to the decisions taken in 31st GST Council meeting and issues clarificatory circulars
from India Tax & Regulatory Services CBIC issues notifications and orders to give effect to the decisions taken in 31st GST Council meeting and issues clarificatory circulars January 9, 2019 In brief The
More informationCapital gains exemption available under India- Mauritius tax treaty - Azadi Bachao Andolan decision followed and McDowell decision distinguished
www.pwc.com/in Sharing insights News Alert 16 November, 2011 Capital gains exemption available under India- Mauritius tax treaty - Azadi Bachao Andolan decision followed and McDowell decision distinguished
More informationSharing insights. News Alert 24 January, Discussion paper on presence of foreign banks in India Regulatory Alert. Overview.
www.pwc.com/in Sharing insights News Alert 24 January, 2011 Discussion paper on presence of foreign banks in India Regulatory Alert Overview Setting the ball rolling for the foreign banks presence in India,
More informationPwC ReportingInBrief. Impact of GST on Ind AS reporting
PwC ReportingInBrief Impact of GST on Ind AS reporting In brief The Government of India has introduced a single tax regime for both goods and services for the entire country with the roll out the Goods
More informationPwC ReportingInBrief. Ind AS Transition Facilitation Group (ITFG) Clarification Bulletin 15
PwC ReportingInBrief Ind AS Transition Facilitation Group (ITFG) Clarification Bulletin 15 In brief The Ind AS Implementation Committee of the Institute of Chartered Accountants of India (ICAI) constituted
More informationSharing insights. News Alert 17 May, Provisions of section 50C applicable even in respect of depreciable assets being land and/or building
www.pwc.com/in Sharing insights News Alert 17 May, 2011 Provisions of section 50C applicable even in respect of depreciable assets being land and/or building In brief In a recent decision, in the matter
More informationPwC ReportingInBrief FAQs on the SEBI circular on the revised format for financial results and implementation of Ind AS
PwC ReportingInBrief FAQs on the SEBI circular on the revised format for financial results and implementation of Ind AS July 2016 www.pwc.in Background The Securities and Exchange Board of India (SEBI)
More informationPwC ReportingInBrief. Ind AS Transition Facilitation Group (ITFG) Clarification Bulletin 13
PwC ReportingInBrief Ind AS Transition Facilitation Group (ITFG) Clarification Bulletin 13 In brief The Ind AS Implementation Committee of the Institute of Chartered Accountants of India (ICAI) constituted
More informationSharing insights. News Alert 4 March, Non-availability of indexation benefit to a non-resident does not amount to non-discrimination.
www.pwc.com/in Sharing insights News Alert 4 March, 2011 Non-availability of indexation benefit to a non-resident does not amount to non-discrimination Background Recently, the Authority for Advance Rulings
More informationSharing insights. News Alert 17 October, Taxability of non-compete fee as business income or capital gains. In brief. Facts.
www.pwc.com/in Sharing insights News Alert 17 October, 2011 Taxability of non-compete fee as business income or capital gains In brief The Mumbai Income-tax Appellate Tribunal (the Tribunal ) in two separate
More informationCountdown to Companies Act, 2013
www.pwc.in Countdown to Companies Act, 2013 Impact on Transactions and Corporate restructuring August 2013 Preface The wait is finally over The Companies Bill, 2012 is just a step away from becoming an
More informationFDI Policy Update. PwC. February 16, 2009
February 16, 2009 Guidelines for calculation of total foreign investment in Indian companies and transfer of ownership or control of Indian companies in sectors with investment limits from resident Indian
More informationSharing insights. News Alert 23 May, Payment made for airborne geophysical survey services is not FTS. In brief. Facts.
www.pwc.com/in Sharing insights News Alert 23 May, 2012 Payment made for airborne geophysical survey services is not FTS In brief In the recent case of De Beers India Minerals Pvt. Ltd. 1 (the assessee),
More informationSharing insights. News Alert 8 August, 2012
www.pwc.com/in Sharing insights News Alert 8 August, 2012 Capital gains on direct and indirect transfer of shares of Indian company by Mauritius tax resident not taxable in India under the India-Mauritius
More informationSharing insights. News Alert 31 May, No PE created by liaison office in absence of any violation noted by RBI. In brief. Facts.
www.pwc.com/in Sharing insights News Alert 31 May, 2012 No PE created by liaison office in absence of any violation noted by RBI In brief In the recent case of Metal One Corporation 1 (the assessee), the
More informationSharing insights. News Alert 25 April, 2011
www.pwc.com/in Sharing insights News Alert 25 April, 2011 Interest under section 234B not payable by employee where salary income is subject to tax deduction at source under section 192 In brief Facts
More informationSharing insights. News Alert 19 April, 2011
www.pwc.com/in Sharing insights News Alert 19 April, 2011 Expenditure on voluntary retirement scheme is tax deductible even if the scheme is not in accordance with the exemption provision for the employees
More informationSharing insights. News Alert 1 February, 2012
www.pwc.com/in Sharing insights News Alert 1 February, 2012 Sharing of net revenues consistently in controlled and uncontrolled transactions held as a valid comparable uncontrolled price In brief In a
More informationEPFO releases Guidelines/clarifications on Indian Provident Fund and Pension Scheme applicable to International Workers
www.pwc.com/in Sharing insights News Alert 6 September, 2011 EPFO releases Guidelines/clarifications on Indian Provident Fund and Pension Scheme applicable to International Workers In brief In October
More informationSharing insights. News Alert 2 May, Itemised sale of assets, in substance, held to be a slump sale taxable under section 50-B. In brief.
www.pwc.com/in Sharing insights News Alert 2 May, 2012 Itemised sale of assets, in substance, held to be a slump sale taxable under section 50-B In brief In the recent case of Mahindra Engineering & Chemical
More informationSharing insights. News Alert 20 March, Key amendments in TP Regulations by the Union Budget Introduction of Advance Pricing Agreement
www.pwc.com/in Sharing insights News Alert 20 March, 2012 Key amendments in TP Regulations by the Union Budget 2012 The Finance Minister presented the Finance Bill 2012 (Finance Bill) in the Parliament
More informationSharing insights. News Alert 30 April 2014
www.pwc.in Sharing insights News Alert 0 Delhi High Court rules on constitution of an Association of Persons (AOP) and the taxability of offshore supplies and services in a turnkey contract In brief The
More informationSharing insights. News Alert 17 February, 2011
www.pwc.com/in Sharing insights News Alert 17 February, 2011 Loss arising to a company on non-speculative transactions of the purchase and sale of shares held to be speculative loss In brief In a recent
More informationSharing insights Tribunal upholds important transfer pricing principles on characterisation and rewards for selling activity In brief Facts
www.pwc.com/in Sharing insights News Alert 1 March, 2012 Tribunal upholds important transfer pricing principles on characterisation and rewards for selling activity In brief In a recent ruling in the case
More informationPwC ReportingInBrief. Ind AS 109, Financial Instruments for corporates
PwC ReportingInBrief Ind AS 109, Financial Instruments for corporates In brief India has early adopted IFRS 9, Financial Instruments by notifying the corresponding Ind AS 109, Financial Instruments. Ind
More informationSharing insights. News Alert 23 February, 2011
www.pwc.com/in Sharing insights News Alert 23 February, 2011 Transfer Pricing Officer cannot propose any adjustment to a transaction in the absence of a valid reference for the transaction by the Assessing
More informationGST Council relaxes compliance requirements for small and medium enterprises and gives relief to the exporters
from India Tax & Regulatory Services GST Council relaxes compliance requirements for small and medium enterprises and gives relief to the exporters October 7, 2017 In brief In its 22 nd meeting, the GST
More informationAAR ruling on taxability of reimbursement of salary costs of seconded employees to group company not based on proper reasoning Madras High Court
www.pwc.com/in Sharing insights News Alert 16 December, 2011 AAR ruling on taxability of reimbursement of salary costs of seconded employees to group company not based on proper reasoning Madras High Court
More informationMembers of a consortium formed to bid and execute a project together cannot be treated as an Association of Persons
Tax & Regulatory Services News Alert* 1 April, 2010 Members of a consortium formed to bid and execute a project together cannot be treated as an Association of Persons Background The Authority of Advance
More informationSharing insights. News Alert 20 May, 2011
www.pwc.com/in Sharing insights News Alert 20 May, 2011 Tax is required to be withheld from tips passed to employees by Hotel employers who have collected them from customers In brief In a recent ruling,
More informationAction 6 Preventing the granting of treaty benefits in inappropriate circumstances
KPMG FLASH NEWS KPMG in India 30 October 2015 Action 6 Preventing the granting of treaty benefits in inappropriate circumstances Introduction Analysis of the Action 6 On 5 October 2015, the Organisation
More informationSharing insights. News Alert 27 July, 2012
www.pwc.com/in Sharing insights News Alert 27 July, 2012 ESOP cost accounted in books as per SEBI guidelines held to be staff welfare expenditure and eligible for deduction PVP Ventures Ltd. In Brief The
More informationSharing insights. News Alert 14 June, OECD releases discussion draft for revision of Chapter VI (Intangibles) of OECD TP Guidelines.
www.pwc.com/in Sharing insights News Alert 14 June, 2012 OECD releases discussion draft for revision of Chapter VI (Intangibles) of OECD TP Guidelines In brief In mid 2010, the Organisation for Economic
More informationSharing insights. News Alert 3 September, Expert Committee Report on General Anti Avoidance Rules. Background.
www.pwc.com/in Sharing insights News Alert 3 September, 2012 Expert Committee Report on General Anti Avoidance Rules Background General Anti Avoidance Rules (GAAR) were incorporated in the Income-tax Act,
More informationPwC ReportingInBrief. Companies (Indian Accounting Standards) Amendment Rules, 2018
PwC ReportingInBrief Companies (Indian Accounting Standards) Amendment Rules, 2018 In brief The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) Amendment Rules,
More informationCanada Tax Court ruling on arm s length arrangement for explicit guarantee provided by a parent to its subsidiary
Tax & Regulatory Services News Alert* 12 March, 2010 Canada Tax Court ruling on arm s length arrangement for explicit guarantee provided by a parent to its subsidiary Background On 4 December, 2009, the
More informationxxxxxxxx Mutual Agreement Answering queries
www.pwc.com/india xxxxxxxx Mutual Agreement Mutual Procedure Agreement - Demystified Procedure Answering queries 2 PwC What is Mutual Agreement Procedure (MAP)? What are the key benefits of pursuing MAP?
More informationCountry-by-country reporting Adapting to a changing documentation regime
Country-by-country reporting Adapting to a changing documentation regime Setting the context The base erosion and profit shifting (BEPS) project of the Organisation for Economic Co-operation and Development
More informationSharing insights. News Alert 14 September, 2011
www.pwc.com/in Sharing insights News Alert 14 September, 2011 Principles of Transfer Pricing critical for determining the arm's length nature of profits attributable to a PE In Brief In a recent ruling,
More informationSharing insights. News Alert 8 February, Trading by way of re-export of imported goods from Special Economic Zone eligible for tax holiday
www.pwc.com/in Sharing insights News Alert 8 February, 2012 Trading by way of re-export of imported goods from Special Economic Zone eligible for tax holiday In brief The Jaipur Income-tax Appellate Tribunal
More informationCBDT issues revised and updated guidance for implementation of TP provisions
Tax Insights from India Tax & Regulatory Services CBDT issues revised and updated guidance for implementation of TP provisions October 19, 2015 In brief The Central Board of Direct Taxes (CBDT) has issued
More informationSharing insights. News Alert 4 November, CBDT amends Rules relating to PAN application. New PAN application forms.
www.pwc.com/in haring insights News Alert 4 vember, 2011 CBDT amends Rules relating to PAN application The Central Board of Direct Taxes ( CBDT ) has notified 1 Income-tax (7th Amendment) Rules, 2011 amending
More informationSharing insights. News Alert 13 May, Competition Law- An update on Combination provisions effective 1 June, Background
www.pwc.com/in Sharing insights News Alert 13 May, 2011 Competition Law- An update on Combination provisions effective 1 June, 2011 Background The Competition Act, 2002 ( the Act ) was enacted to regulate
More informationSharing insights. News Alert 12 April, High Court s decision on royalty discussing criteria for allowability and taxpayer s commercial prudence
www.pwc.com/in Sharing insights News Alert 12 April, 2012 High Court s decision on royalty discussing criteria for allowability and taxpayer s commercial prudence In brief In a recent ruling in the case
More informationJuly Indian social security For cross-border assignments
July 2018 Indian social security For cross-border assignments Contents Section 1: The Indian social security system for cross border workers Scope International worker Exemption Contributions Allocation
More informationCategorisation of mutual fund schemes
www.pwc.in Categorisation of mutual fund schemes What SEBI s circular means for investors and AMCs November 2017 What does the SEBI guideline say? On 6 October 2017, the Securities and Exchange Board of
More informationTax & Regulatory Services
The Central Board of Direct Taxes (CBDT) has issued Circular No 9/2007 dated December 20, 2007, explaining the provisions of Fringe Benefit Tax (FBT) on Employee Stock Option Plans (ESOPs). CBDT has clarified
More informationOECD BEPS Action Plan 7: Discussion Draft on preventing artificial avoidance of permanent establishment status
KPMG FLASH NEWS KPMG IN INDIA OECD BEPS Action Plan 7: Discussion Draft on preventing artificial avoidance of permanent establishment status 14 November 2014 Background The Organisation for Economic Co-operation
More informationGST Council reduces the tax rates of various goods, mainly goods taxed at 28% and relaxes the compliance due dates
from India Tax & Regulatory Services GST Council reduces the tax rates of various goods, mainly goods taxed at 28% and relaxes the compliance November 12, In brief In its 23 rd meeting, the GST Council
More informationThe CBDT issues draft guiding principles for determination of the Place of Effective Management of a company
24 December 2015 The CBDT issues draft guiding principles for determination of the Place of Effective Management of a company Background The Finance Act, 2015 amended 1 the provisions of Section 6(3) of
More information