A. Expatriate Taxation Matters
Solutions, which may be provided by Chartered Accountants include:
1) Obtaining Tax Registrations - Assist in obtaining the tax identification number (Permanent Account Number) of the expatriate from the income-tax authorities;
2) Determine Residential Status - Based on the presence of the expat in India, the residential status of such expat may be determined under the Act;
3) Issuance of technical opinions on questions of law;
4) Monthly withholding tax calculation
5) Representation before the revenue authorities including appellate level and tax tribunal and allied assistance on litigation management including strategic advisory
6) Annual Income tax return preparation and filing - Prepare the computation of income and assist in filing the annual income tax return of the expatriate in India.
7) Evaluating the applicability of the double taxation avoidance agreement with the relevant country, in relation to relevant streams of income;
B. NRI TAXATION
Some of the solutions, which may be provided by Chartered Accountants include:
1. Obtaining Tax Registrations - Assist in obtaining the tax identification number (Permanent Account Number) of the NRI from the income-tax authorities;
2. Determining Residential Status - Based on the presence of the NRI in India, the residential status of such NRI may be determined under the Act;
3. Property and investment transaction advisory - This would include advise to NRIs on acquisition and disposal of investments as well immoveable property and associated tax compliances if any;
4. Issuance of technical opinions on questions of law
5. Pre and post NRI status advisory - Advise in relation to income tax disclosures pre and post NRI status including disclosures if any, under Undisclosed Foreign Investments and Assets Act 2015
6. Preparing and filing Annual Income tax returns and transaction-based challans for tax payments if any - Prepare computation of income and assist in filing the annual income tax return of the expatriate in India;
7. Representation before the revenue authorities including appellate level and tax tribunal and allied assistance on litigation management including strategic advisory;
8. Evaluating the applicability of the double taxation avoidance agreement with the relevant country, in relation to relevant streams of income;
9. Assistance in claim of foreign tax credits, based on relevance;
10. Issuance of remittance certificates under Form 15CA/Form 15CB and other compliance certificates if any.
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C. Cross Border Transactions
Some of the solutions, which may be provided by Chartered Accountants in relation to include:
I. Corporate reorganisations - Suggest suitable investment structure for the Overseas entities especially from Indian income-tax perspective including recommending suitable jurisdictions to locate the Overseas holding company for the proposed investments in India and suitable modes of investments in the Indian company.
II. Capital reorganisations - Suggest appropriate alternatives viz. capital reductions, bonus issues, rights issues, preferential and debenture and bonds issues, share buybacks etc., involving non-resident stakeholders. This aspect is relevant from an overseas funding perspective as well.
III. Fair Market Valuation of shares and investments - In case of associated enterprises or deemed to be associated enterprises, international or deemed international transactions, there could be a scope for advisory on the aspects of valuation from Indian transfer pricing regulations perspective.
IV. Transfer Pricing compliance review including profit attribution study in case of cross border transactions between related parties.
V. Tax due diligence - Conduct a vendor/buyer tax due diligence which shall involve review of the past records of the company in order to find any gaps/observations which may have financial or other impact;
VI. Issuance of technical opinions on questions of law;
VII. Ideation on profit repatriation and exit options - Assistance in analyzing various possible modes of profit repatriation and exit of investments from India, based on the analysis of the tax laws and treaty provisions;
VIII. IP/Intangibles Planning - Advising and evaluating alternatives for the location of the IP/intangibles owned by the group in appropriate jurisdiction in order to achieve tax efficiency;
IX. Obtaining certificate under section 197 - Assist in making an application to the income-tax officer to obtain a lower withholding tax certificate under section 197 of the Act basis the computation of estimated profits or gains including losses if any attributable to the foreign entity in India;
X. Issuance of remittance certificates under Form 15CA/Form 15CB and other compliance certificates if any.
XI. Representation before the revenue authorities including appellate level and tax tribunal and allied assistance on litigation management including strategic advisory
D. Taxation of Royalty/ Fees for Technical services
Some of the solutions provided by Chartered Accountants include
1. Tax advisory - Assist in evaluating whether a payment would fall within the definition of ‘royalty’ or ‘fees for technical services’ both under the Act as well as under the double taxation avoidance agreement. Based on the analysis, advice on the applicable tax rate for the said payment.
2. Preparation and filing of Income-tax Return - Assist the foreign entity in preparing and filing of the annual income-tax return declaring the income from royalty or FTS in the income-tax return;
3. Withholding tax return - Assist the Indian entity in deducting taxes on royalty/FTS payments and preparing and filing the withholding tax returns in relation to such payments made to foreign entities.
4. Issuance of technical opinions on questions of law;
5. Issuance of remittance certificates under Form 15CA/Form 15CB and other compliance certificates if any.
6. Representation before the revenue authorities including appellate level and tax tribunal and allied assistance on litigation management including strategic advisory.
E. Permanent Establishment aspects for non-resident
Some of the solutions which may be provided by Chartered Accountants include:
1. Tax advisory - Analyze and review the facts of the foreign entity in order to determine whether the said foreign entity has any permanent establishment in India under the relevant double taxation avoidance agreement, read with the extant provisions of law including BEPS Action plans.
2. Income attribution - Assist the foreign entity in carrying out the exercise of determining the income attributable to the foreign entity in India on account of it having a permanent establishment in India;
3. Assistance in obtaining Tax Registrations - Assist the foreign entity in obtaining the tax identification number (Permanent Account Number) for its permanent establishment in India from the income-tax authorities;
4. Obtaining certificate under section 197 - Assist in making an application to the income-tax officer to obtain a lower withholding tax certificate under section 197 of the Act basis the computation of estimated profits attributable to the permanent establishment of the foreign entity in India;
5. Preparation and filing of Income-tax Return - Assist the foreign entity in preparation and filing of the income-tax return in relation to the permanent establishment in India;
6. Issuance of technical opinions on questions of law;
7. Representation before the revenue authorities including appellate level and tax tribunal and allied assistance on litigation management including strategic advisory
F. GAAR (GENERAL ANTI-AVOIDANCE RULE)
Some of the solutions which may be provided by Chartered Accountants include:
1. GAAR evaluation - Evaluate a transaction/structure from GAAR perspective in order to determine if there is any exposure of the said transaction/structure being considered as having entered into with the intention of avoiding taxes in India.
2. Issuance of technical opinions on questions of law;
3. Representation before the revenue authorities including appellate level and tax tribunal in relation to the arrangements alleged to have been anti-avoidance arrangements;
G. BEPS (BASE EROSION AND PROFIT SHIFTING) & MLI (MULTILATERAL INSTRUMENT)
Some of the solutions which may be provided by Chartered Accountants would include:
1. BEPS Review - Undertake an entire review of the business model of the entity in light of the provisions of the BEPS and the amended provisions as per the Act,which are in line with BEPS.
2. Modifications to existing business models - Based on the aforesaid review, suggest alterations or modifications to the existing business model in order to make it tax efficient and compliant with BEPS provisions.
3. Tax Advisory - Any other advisory work in relation to the impact of BEPS/MLI to the business of the entity.
4. Issuance of technical opinions on questions of law.
5. CbCR (Country-by-Country Reporting) and Master File related compliances
H. Withholding tax on foreign remittances
Some of the solutions which may be provided by Chartered Accountants in relation to Withholding tax on foreign remittances include:
1. Applicability of withholding tax - Evaluate the withholding tax implications on foreign remittances both under the Act as well as under the relevant double taxation avoidance agreement and accordingly, advice the payer to withhold appropriate taxes;
2. Issuance of technical opinions on questions of law;
3. Issuance of Form 15CB - Assist in preparation and issuance of Form 15CB in cases where the foreign remittances are subject to withholding tax;
4. Filing of the withholding tax return - Assist in preparation and filing of the withholding tax return in Form 27Q in relation to the foreign remittances.
I. FOREIGN TAX CREDIT
Some of the solutions which may be provided by Chartered Accountants include:
1. Eligibility of foreign tax credit - Verify various documents and calculate the amount of credit for the foreign taxes available in India;
2. Issuance of technical opinions on questions of law;
3. Filing of Form 67 - Assist the company in filing Form 67 in order to claim the foreign tax credit in India
J. Transfer Pricing
Some of the solutions which may be provided by Chartered Accountants include:
1. Business model study - Performing benchmarking study to ensure that all international transactions entered by persons are maintained at arm’s length price;
2. Documentation compliance - Assistance maintenance in keeping information and of documents required by persons involving international transactions with associated enterprises;
3. Issuance of Chartered Accountants Certificate i.e., Form No. 3CEB - Required by persons involving international transactions with associated enterprises;
4. Facilitating complete compliance with CbCR (Country-by-Country Reporting) and Master File requirements
5. Representation before the revenue authorities including appellate level and tax tribunal;
6. Assistance with competent authority negotiations and mutual agreement procedures;
Disclaimer: The information contained in this article is based on knowledge obtained from ICAI Publications. It is provided for general guidance to the intended user. I recommend that professional advice is necessary before taking any action on the basis of the article provided.
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