Tax Headlines on Headline Taxes
Kitty Miv, Editor
30 August, 2021
Well, there's been big news for big business on the tax front recently, starting with the announcement from the Indian Government that it would be walking back the unpopular retroactive tax provisions introduced to the tax code as part of a tax dispute with telecoms giant, Vodafone.
The dispute involving Vodafone related to the UK firm's acquisition of Hutchison Essar and the Indian Government's claims that the transaction should be subject to capital gains tax. Vodafone has consistently maintained that it is not liable for a USD2.2bn bill in back taxes and penalties relating to the deal.
In January 2012, the Indian Supreme Court ruled in favor of Vodafone stating that transfers of non-resident companies made by non-residents should not attract Indian capital gains tax. The Government at the time, however, defied the ruling by amending Section 9 of the Income Tax Act 1961 with retroactive effect from 1961, the year in which India's current income tax legislation was introduced, to allow India to tax the transaction.
That decision also affected a number of other companies, including Cairn Energy, which also became embroiled in a protracted, high-profile, and lengthy legal battle through the courts with Indian authorities.
In order to improve relations with international investors, the Government has now rewritten the controversial amendment to provide that it should apply only prospectively.
Meanwhile, in Guernsey, the authorities are moving forward with their plans significant tax reform proposals (which we looked at a couple of weeks ago), with the publication of a Tax Review "green paper" on potential fiscal policy responses by the Policy and Resources Committee. The review will be formally debated by the States Assembly in September, and it is hoped that the publication of the green paper will permit a "a full, open, no-holds-barred debate" to take place. Sounds exciting!
The Government explained that: "The Tax Review paper looks specifically at revenue-raising options through tax and social security contributions and puts forward three options to help inform Members and give context as to how much revenue could be raised and what the impacts would be. The Committee does not believe the ultimate solution must be limited to one of these three options, but it does stress to States Members that any solution needs to be realistic and recognise the scale of the challenge."
And last but by no means least for this week, in China, the authorities seem to be gearing up to level the playing field for taxpayers in terms of reaping the benefits of wealth growth across the country, with plans to rein in tax breaks for large technology, entertainment, and online tutoring companies being reported.
Chinese President Xi Jinping has indicated that China will look to ensure a higher tax burden on exceptionally profitable companies and high net worth individuals.
Until next week!
« Go Back to Blogs