The India budget 2018 presented by the Finance Minister Arun Jaitley to the parliament has arisen highly attention due to its radical reforming measures, in particular in the field of direct taxation. Alongside a proposed reduction in corporate income tax to 25% for resident companies, there are other tax proposals worthy to be noted.
The budget has introduced a remarkable revamp into the concept of “permanent establishment(PE)”.
On the one hand, a lower threshold of dependent agency PE is suggested in accordance with the recommendation by OECD. This is achieved by signing the multinational instrument and acts as an anti-abuse or anti-avoidance measure to enhance the proper function of the current PE principle.
On the other hand, the business connection concept under Income Tax Act (1960) is supplemented with “significant economy presence” concept, in accordance with the suggestion by the Committee on Taxation of E-Commerce. A non-resident would be deemed to have a significant economy presence within the country irrespective of whether it has a physical presence or not if:
These articles are only valid if they have been inserted into bilateral tax treaties signed by India.
From domestic perspective, this budget 2018 also propose the following measures:
With the fast growth of China’s economy and the continuous improvement of the comprehensive strength of domestic enterprises, as well as the implementation of the “One Belt, One Road” policy, an increasing amount of Chinese enterprises are beginning to expand their global footprint and establish their presence in Europe.
TPA Global has developed a practical roadmap of 6 steps meant to guide CFOs in their Journey of rising above troubles to reach a situation of full control. These steps are presented in a series of short video clips (3-5 minutes):