MNCs, Individual Taxpayers Get Notices Despite Disputes Being Settled
New Delhi: A spate of high profile tax demands on several multinational companies (MNCs) such as Shell, Nokia and Vodafone has the potential to hurt sentiment and experts said investors are hoping that the Budget will have some steps to ensure fair dispute resolution. It is not only companies which are being targeted, even individual taxpayers have come under the taxman’s scrutiny. Several taxpayers have been served notices despite disputes being settled. The tax department, which is facing slowing revenues, has unleashed several demands in the past few weeks, attracting strong criticism and the firms have vowed to challenge the notices.
Experts said the government’s efforts to assure investors have taken a knock with these notices and firms are anxious about fresh developments. “The fact is that revenue collection pressure gets translated down to officers. The high pitch assessment has reached a level of absurdity,” said Gokul Chaudhri, partner with tax consultancy firm BMR Advisers. “The question is how do you bring back investor confidence in this environment? There is uncertainty in the mind of the investor community,” Chaudhri said, adding that all eyes are on the Budget to see whether finance minister P Chidambaram reassures investors and announces an action plan for dispute resolution.
Chidambaram has taken several measures to assure investors about the stability of India’s tax policies after the impact of some tax proposals in 2012-13 scared investors to the sidelines. The government has deferred implementation of the controversial General Anti Avoidance Rules (GAAR) to 2016 and vowed to provide a non-adversarial tax environment.
“At a conceptual level things are looking positive with the government deferring GAAR and accepting recommendations of the Rangachary committee. However, there seems to be a disparity between the policy level and the ground level reality,” said Dinesh Kanabar, deputy CEO of consulting firm KPMG. He said a part of the problem lies in the stiff targets set for revenue officials which translated to such steep tax demands. “The need is to expand the tax base,” Kanabar said.
Telecom giant Vodafone and Shell India have said they will challenge the tax notices, while Finnish telecom giant Nokia has said actions of the tax authorities were “unacceptable and inconsistent with Indian standards of fair play and governance”. “Shell India’s considered view is that the transfer pricing order is based on an incorrect interpretation of the Indian tax regulations and is bad in law as this is a capital receipt on which income tax cannot be levied. Funding of a subsidiary through issue of shares is common in India and globally,” Shell India chairman Yasmine Hilton has said.
“Taxing the money received by Shell India is in effect a tax on FDI, which is contrary not only to law but also to the spirit of the recent global trip by the finance minister to attract further FDI into India,” Hilton has said. Slowing economic growth has put pressure on revenues and authorities are struggling to keep the fiscal deficit within the targeted 5.3% of gross domestic product. Revenue officials are under pressure to meet the tax targets set for the year.
FUELLING CONTROVERSY
The tax department, which is under pressure to meet targets set for the year, has unleashed several demands in the past few weeks, attracting strong criticism
While Vodafone and Shell India plan to challenge the tax notices, Nokia has said actions of the tax authorities were “unacceptable and inconsistent with Indian standards of fair play and governance”
“There seems to be a disparity between the policy level and the ground level reality,” said Dinesh Kanabar, deputy CEO of consulting firm KPMG, adding that a part of the problem lies in the stiff targets set for revenue officials which translated to such steep tax demands
COURTESY:
TIMES NEWS NETWORK
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/02/14&PageLabel=21&EntityId=Ar02101&ViewMode=HTML
New Delhi: A spate of high profile tax demands on several multinational companies (MNCs) such as Shell, Nokia and Vodafone has the potential to hurt sentiment and experts said investors are hoping that the Budget will have some steps to ensure fair dispute resolution. It is not only companies which are being targeted, even individual taxpayers have come under the taxman’s scrutiny. Several taxpayers have been served notices despite disputes being settled. The tax department, which is facing slowing revenues, has unleashed several demands in the past few weeks, attracting strong criticism and the firms have vowed to challenge the notices.
Experts said the government’s efforts to assure investors have taken a knock with these notices and firms are anxious about fresh developments. “The fact is that revenue collection pressure gets translated down to officers. The high pitch assessment has reached a level of absurdity,” said Gokul Chaudhri, partner with tax consultancy firm BMR Advisers. “The question is how do you bring back investor confidence in this environment? There is uncertainty in the mind of the investor community,” Chaudhri said, adding that all eyes are on the Budget to see whether finance minister P Chidambaram reassures investors and announces an action plan for dispute resolution.
Chidambaram has taken several measures to assure investors about the stability of India’s tax policies after the impact of some tax proposals in 2012-13 scared investors to the sidelines. The government has deferred implementation of the controversial General Anti Avoidance Rules (GAAR) to 2016 and vowed to provide a non-adversarial tax environment.
“At a conceptual level things are looking positive with the government deferring GAAR and accepting recommendations of the Rangachary committee. However, there seems to be a disparity between the policy level and the ground level reality,” said Dinesh Kanabar, deputy CEO of consulting firm KPMG. He said a part of the problem lies in the stiff targets set for revenue officials which translated to such steep tax demands. “The need is to expand the tax base,” Kanabar said.
Telecom giant Vodafone and Shell India have said they will challenge the tax notices, while Finnish telecom giant Nokia has said actions of the tax authorities were “unacceptable and inconsistent with Indian standards of fair play and governance”. “Shell India’s considered view is that the transfer pricing order is based on an incorrect interpretation of the Indian tax regulations and is bad in law as this is a capital receipt on which income tax cannot be levied. Funding of a subsidiary through issue of shares is common in India and globally,” Shell India chairman Yasmine Hilton has said.
“Taxing the money received by Shell India is in effect a tax on FDI, which is contrary not only to law but also to the spirit of the recent global trip by the finance minister to attract further FDI into India,” Hilton has said. Slowing economic growth has put pressure on revenues and authorities are struggling to keep the fiscal deficit within the targeted 5.3% of gross domestic product. Revenue officials are under pressure to meet the tax targets set for the year.
FUELLING CONTROVERSY
The tax department, which is under pressure to meet targets set for the year, has unleashed several demands in the past few weeks, attracting strong criticism
While Vodafone and Shell India plan to challenge the tax notices, Nokia has said actions of the tax authorities were “unacceptable and inconsistent with Indian standards of fair play and governance”
“There seems to be a disparity between the policy level and the ground level reality,” said Dinesh Kanabar, deputy CEO of consulting firm KPMG, adding that a part of the problem lies in the stiff targets set for revenue officials which translated to such steep tax demands
COURTESY:
TIMES NEWS NETWORK
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/02/14&PageLabel=21&EntityId=Ar02101&ViewMode=HTML
No comments:
Post a Comment