Private Equity / Venture Capital Funds Recent Tax & Regulatry Develpments December 2011 Punit Shah
Cntents Tax Develpments India-Mauritius Treaty Key Develpments Alternative Jurisdictins - Cmparative Analysis Tax Infrmatin Exchange Agreements Vdafne Cntrversy Permanent Establishment Glbal Develpments Regulatry Develpments SEBI Exchange Cntrl / FDI Plicy NBFC Cmpany Law 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved. 2
Tax Develpments
India-Mauritius Treaty Key Develpments CBDT Circular and favurable judicial precedents Circular 789 dated April 13, 2000 Azadi Bacha Andlan (Supreme Curt - 2003) E*Trade (AAR) (2010) SLP filed by the Revenue befre SC Praxair Pacific Limited (AAR - 2010) D. B. Zwirn Mauritius (AAR) (2011) Ardex Crpratin (AAR) (2011) Negative judicial precedents / attempts by tax authrities denying Treaty benefits SMR Investments (Delhi Tribunal) (2010) Aditya Birla Nuv Limited (Bmbay HC 2011) India-Mauritius treaty News f pssible re-negtiatin General Anti Avidance Rules under Draft Direct Taxes Cde 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved.
Alternative Jurisdictins Cmparative Analysis Particulars Taxability in India Capital Gains Treaty cuntry Singapre Cyprus Netherlands (subject t LOB clause) (partially exempt) Dividend Interest 15% n grss basis 10% n grss basis 10% n grss basis (beneficial wnership) (beneficial wnership) (beneficial wnership) Taxability in hme jurisdictin - Capital Gains - Dividend - Interest (Tax incentives) (Headline tax criteria) 2% (India tax credit cnsidered) (Exemptin frm Defence Cntributin subject t cnditins) (India tax credit cnsidered) / 25% (participatin exemptin) / 25% (participatin exemptin) 15% (Indian tax credit cnsidered) LOB clause in Treaty Yes N N Service PE clause Yes N N 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved.
Tax Infrmatin Exchange Agreements Signed In frce Bahamas Bermuda British Virgin Islands Isle f Man Cayman Island Nt yet 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved.
Vdafne Cntrversy Taxability f ffshre transfer resulting int transfer f underlying assets in India Cntrlling interest Dcumentatin Draft Direct Taxes Cde Taxability f indirect transfer Practical difficulties Chinese Circular n 698 Shantha Bitechnics i (AAR) (2011) 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved.
Permanent Establishment Glbal Develpments Australian tax determinatin German tax ruling 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved.
Regulatry Develpments
Regulatry Develpments SEBI Draft Alternative Investment Funds Regulatins Cncept paper n Investment Advisrs Regulatins Infrastructure Debt Funds New SEBI Takever Cde (2011) Subhkam Ventures (SC Ruling) Exchange Cntrl / FDI Plicy Put ptins cntrversy Dwnstream investment Freign investment in a dmestic fund Liberalizatin f FDI plicy n transfer f shares 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved.
Regulatry Develpments NBFC CIC Regulatins Key recmmendatins f wrking grup n issues and cncerns in NBFC sectr Cmpany Law Cmpanies Bill 2011 Unlisted Public Cmpanies (Preferential Alltment) Rules, 2011 2010 KPMG, an Indian Partnership and a member firm f the KPMG netwrk f independent member firms affiliated with KPMG Internatinal Cperative ( KPMG Internatinal ), a Swiss entity. All rights reserved.
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