Independent trade associations, representing more than 2.50 lakh companies engaged in a wide spectrum of industries throughout the world, have expressed deep concerns about many of the tax provisions proposed in the Finance Bill 2012.
In a letter to the Prime Minister and Finance Minister, the associations said: “If [provisions of the Finance Bill 2012 are] enacted, they would significantly alter the Indian taxation of the member companies, with retroactive effect extending back for as much as half a century, and reverse many decided cases.
Some of our member companies had already begun reevaluating their investments in India due to increasing levels of controversy and uncertainty regarding taxation in recent years.”
The letter goes on to say that the sudden and unprecedented move in the Bill “has undermined confidence in the policies of the Government of India toward foreign investment and taxation and has called into question the very rule of law, due process, and fair treatment in India.”
Keywords: global trade bodies, Vodafone, Prime Minister Manohan Singh, Pranab Mukherjee, Vodafone controversy
Giving retrospect effect to a law just to salvage a case lost in the court is legalized robbery.
This is just a clarificatory amendment. I don't understand why international corporates want to get away without paying fees to the Indian Govt. Vodafone was just one case. In the past years we have had scores of cases where ruling was in favor of the govt. If we listen to these agencies, we will have to give BACK the money earned in those cases! Its not fair to the people who pay the amounts diligently.
Making all the future offshore transactions should be the right way to
go ahead. Rather than going back changing the dynamics which is not a
trade practice.
Please remember this tax is not on Vodafone but on Hutch. Vodafone is being asked to pay this because they did not deduct it from the payment of USD 8 billion they made to Hutch. Also, Vodafone has signed indemnity with Hutch to realise it from the latter if the ruling goes against them.
Also remember that Hutch got this huge valuation because of their Indian customers, and the Indian business environment. Hutch has not paid any tax on this huge gain in any country - neither the home country nor the host country.
Also, look at the irony that if an ordinary businessman -resident or non resident sells his assets he has to pay capital gains but if he does so throgh three set of companies in three tax havens the courts call it legitimate tax planning - even if it results in no tax in any country. Thats the ability of clever advocates.
In the article the associations say that "an overseas transaction cannot be taxed in India even it it has the indirect effect of changing control of a company in India." This is also the interpretation of the Supreme Court but the Parliament has the right to clarify a law if it believes the law has been misinterpreted by the Supreme Court. Clarification of a law is not the same as retrospective amendment of a law. Clarification is a matter of interpretation. The charge of retrospective amendment can only be made if the law was applicable in the past. My understanding is that the Government is saying that the law interpreted by the Supreme Court in January 2012 was not applicable in the past.
This govt. looks to have lost all its composure in all the mayhem, created of its own, - from corruption to unjustifiable and brazen defence of culprits to bad governance to lapses in national security and mismanagement. In the process it is putting the entire country to shame in front of the whole world now.
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