Establishing Business
As per Section 2(m) of the Limited Liability Partnership Act, a foreign LLP is a limited liability partnership formed, incorporated or registered outside India; which establishes a place of business in India. A foreign LLP shall establish a place of business in India by filing Form 27; enlisting there in, the details regarding incorporation of LLP, details of designated partners and partners, naming atleast two authorized representatives for complying with the provisions of the LLP Act.
For filing documents and registration, foreign LLPs are classified into three categories:
- LLP incorporated in any country with is a part of the Commonwealth.
- LLP incorporated in any country which is not a part of the Commonwealth but is a party to the Hague Apostlie Convention of 1961.
- LLP incorporated in a country which is not a part of the Commonwealth nor a party to the Hague Apostile Convention of 1961.
Reservation of Name
Foreign LLPs may reserve their existing name for a period of three years by applying to the Registrar in Form 25. This may be further renewed.
Pre-requisites
Prior to registration, partners need to fulfill relevant Foreign Exchange Rules, regulations and Guidelines of the country of origin. Opening branch office of a foreign LLP also requires prior approval of the RBI.
Filing Returns
Every foreign LLP shall file with the Registrar a Statement of Accounts and Solvency in Form 8, duly signed by the authorized representatives within a period of 30 days from the end of six months of the financial year.
The documents are required to be in English translation. If a document is not in English, there shall be annexed to it, a certified translation authenticated by an Advocate, Chartered Accountant, Company Secretary or Cost Accountant.
Tax Structure
A foreign LLP would be liable to tax under the Income Tax Act, 1961 if the whole or any part of its control and management is situated in India. However, the characterization of a foreign LLP for tax purposes would depend on the nature of the LLP or LP in the country of it’s organisation.
If characterized as LLP, it would be liable to tax at 30% of its total income. If total income exceeds one crore rupees, it will be also liable to a further surcharge of 10% of computed tax. This surcharge is subject to marginal relief.The amount of Income tax and applicable surcharge shall be further increased by education cess and secondary and higher education cess calculated at 4% of such income tax and surcharge.
References
- http://www.mca.gov.in/Ministry/actsbills/pdf/LLP_Act_2008_15jan2009.pdf
- https://swaritadvisors.com/learning/foreign-limited-liability-partnership-firm-meaning-requirements/
- http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Characterisation_of_LLP_for_Tax_and_Treaty_Purposes_-_Indian_Perspective.pdf
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