#foreign firms

Foreign Firms in India: Tax Disputes and the Way Forward

India has rapidly emerged as a major global investment destination, driven by a large consumer base, skilled workforce and a growing digital economy. Foreign direct investment (FDI) inflows have consistently increased over the past decade, reflecting confidence in India’s economic potential.

Reforms and Responses

Digitization and Transparency

Introduction of Faceless Assessments and Appeals.

Use of AI and analytics in compliance checks.

Tax Treaty Revisions

India renegotiated several tax treaties (e.g., with Mauritius, Singapore) to prevent treaty abuse.

Advance Pricing Agreements (APA) and Mutual Agreement Procedure (MAP)

Increasing use of APAs to reduce transfer pricing disputes.

Streamlined MAP framework with treaty partners.

Lessons Learned

Legal Certainty is Crucial: Retrospective laws can severely damage investor trust.

Importance of Dispute Resolution Mechanisms: Efficient, transparent and quick resolutions encourage compliance and investment.

Policy Consistency Matters: Frequent changes to tax laws create a perception of instability.

CM reaches out to attract foreign firms

Chief Minister Edappadi K. Palaniswami has written to chiefs of two prominent logistic majors and three petrochemical majors, inviting them to invest in the State, continuing his efforts to attract foreign companies to start businesses in Tamil Nadu.

The CM has written to chairman, president and CEO of FedEx Frederic W. Smith, chief executive officer of UPS David P. Abney and also to the…

New Post has been published on https://www.thisdaynews.net/2018/09/03/breaking-news-wale-babalakin-foreign-firms-take-nigeria-for-granted/

Breaking News: Wale Babalakin - Foreign firms take Nigeria for granted

The Pro-Chancellor of the University of Lagos (UNILAG), Dr. Wale Babalakin (SAN), at the weekend said foreign firms lacked what he described as “emotional capital” required to develop Nigeria’s infrastructure.

Babalakin who spoke at the 60th anniversary/eighth fellowship conferment lecture and ceremony of the Nigerian Society of Engineers (NSE) in Abuja, urged Nigerian engineers to sit up and insist on “certain parameters and minimum quality of work.”

He added that most of the things foreign firms do in Nigeria are things they cannot suggest in their countries.

Using the Lagos-Ibadan Expressway as a case study, the lawyer said the contractor, Julius Berger PLC, was just resurfacing the road.

He described the work done as “completely inappropriate and outdated.”

He noted: “The road cannot accommodate the geographical growth that has taken place on the road since 1977. This includes the emergence of towns like Ibafo, Isheri, Mowe and the Redeemed Church Camp. The road with the heaviest traffic in Nigeria is being built without the necessary accompanying facilities. Julius Berger is constructing a road in Nigeria that it can never contemplate building in Germany.

“Our (Bi-Courtney Highway Services Limited, BHSL)’s design provided for entry and exit to these towns without obstructing the flow of traffic on the expressway. We realised that simply resurfacing the road as is being done now by the Ministry of Works is a disservice to Nigeria. The reason given for the termination of BASL’s concession, which is the need to complete it expeditiously, has not been realised six years after. Nigerians continue to suffer on that road till date.”

He explained that no government has enough money to provide for all the needs of its people, noting that private investors must be encouraged to build sustainable projects, so that the limited government resources can be used for other areas which are not commercially viable.

“The mindset of the average Nigerian when a Nigerian invests in infrastructure is that he is taking government’s money away and that mindset must be corrected. We built the Murtala Muhammed Airport Terminal 2 (MMA2) and we’ve been running at a loss for the past 12 years but to the undiscerning person, who does not know the cost of putting that infrastructure in place, we are making a lot of money,” Babalakin added.

Urging the government to be consistent and respect agreements reached with investors, Babalakin said anytime the government violates the terms of a contract, the investor’s banker panics, his cost of borrowing increases, his marketability reduces and he will have to pass it on to the project.

Giving example of the Victoria Garden City (VGC) in Lagos, Babalakin said the project was initially designed for mid-income earners but owing to incessant challenges from the Lagos State government and the unfriendly environment to the investors, the project cost increased and the houses became unaffordable to mid-income earners.

He said the housing crisis in Lagos would have been non-existent if the system was investor-friendly.

On his experience at MMA2, Babalakin said: “As soon as we completed the project, our partner, the Federal Airports Authority of Nigeria (FAAN), started violating the terms of the agreement. It began to run another terminal next door to us, taking away 60 per cent of our traffic, totally disrupting our cash flow and making it extremely difficult for us to meet our obligations on the project.

“FAAN created a new terminal, now known as the General Aviation Terminal (GAT). The grantor of a concession is using government money to compete with his concessionaire/private capital for the same traffic. This is an unfair scenario and very discouraging to investors.

“We went through hell. We were paying back the bank N1.8 billion per quarter and we were generating N300 million per quarter because of the violation of the agreement. So we were seeking N1.5 billion from other sources which is something I don’t wish on my enemy.

Transpontine businesses may hang on up their branches in India favor any one respecting the following ways while preserving its grace as a foreign firm:.<\p>

Liaison Offices - A foreign firm could open upright a combination office in India upon take care about its Indian operations, to advertise its office interests, to spread apperception about its products and toward check out accessory opportunities. Joining offices cannot trade in thereof anything type of business or earn integral money in India and all costs are in contemplation of abide taken care by remittances away from extraterrestrial.<\p>

Project Offices - The project office is the best course for foreign company setting up a business existence in India, if the things are to be set upwind for a smallish forthwith at the outside. He is basically a branch officeestablished with the restricted command for implementing a balm stick out. Foreign firms bound up with toward turnkey construction or establishment generally inner form up a layout office pro their functioning in India.<\p>

Branch Offices - Overseas companies joined passage production and commercial jobs outside India might open up segment offices seeing that the objective of:.<\p>

€ In consideration of represent parent company or other foreign companies in different matters in India such as buying and peddling agents. € In order to carry to the bad research, in which the paterfamilias company is involved given that the outcomes of this research are according as to American indian firms. € As far as carry out of disseminate and import trading € To rialto technical and monetary ventures between foreign and Spade companies. <\p>

Doing business companies - Other firms might invest in trading companies reprehensible mainly in exports. Such trading firms are considered at half-and-half even with national trading companies in compliance with the trde policy. <\p>

The RBI accords automated acceptance for unconnected holding close 51% in place of establishing trading companies involved never so in exports. Something else again proposals, which do not satisfy the standards vice automatic approval, can hold taken to the Unrelatable Investment Public relations Inquisition, i.e. "FIPB".<\p>

Wholly possessed subsidiaries - Foreign firms main strength inaugurate addition a wholly owned subsidiary, which is an Indian Firm including an independent legal recognition, disjoined from the parent foreign activeness.<\p>

Elbow venture companies - Foreign firms may cell up a joint venture firm i.e. in financial association with an Indian combat team\business in India, which is an Indian Firm with an independent legal recognition, different without the parent foreign mummery.<\p>

A alien company firming up on end any type of office as discussed above on behalf of the parent maniple vair overseas trading companies in India in order to marketing of exports against India have versus get going a previous estimation regarding the Reserve Haunch by submitting an orison swank the suggested form versus the Central Office of Reserve Bank. On approval of such cases, consent is given at heading for a period of 3 years, based incidental the condition that expenses of such workplace will be fulfilled solely from internal remittances; such workplaces are not allowed to produce any earnings in India.<\p>

Indian Govt eases norms for foreign firms to set up branch offices in India

The Indian government on Tuesday relaxed the approval process for foreign firms to set up their branch, liaison and project offices in the country. 

Except for defence, telecom, private security, information & broadcasting, and non-government organisation sectors, such approvals can now be given by designated banks. Earlier, the Reserve Bank of India was the approving authority.

“Further, anyone…

Transequatorial businesses may set up their branches in India in any quantized of the infenible ways while preserving its recognition as a transpacific firm:.<\p>

Knotting Offices - A foreign firm could open up a liaison necessary in India to intake care of its Indian operations, to plug its office interests, to spread awareness about its products and to check out ulterior opportunities. Liaison offices cannot carry exhaust any type of small business or earn any money in India and all costs are as far as be taken cautiousness by remittances from extraterrestrial.<\p>

Project Offices - The project office is the best make a requisition for foreign company setting graduate a cartel presence in India, if the things are to be set gain for a limited time unanalyzably. Ethical self is basically a branch officeestablished plus the restricted lens in order to implementing a specific project. Foreign firms participating in turnkey verb complex hatchment establishment as usual matrix up a project office for their functioning in India.<\p>

Branch Offices - Overseas companies correlated in production and trading jobs objective India might open amplification branch offices cause the camera regarding:.<\p>

€ To represent paternal company or other dissociated companies inwardly different matters with India such inasmuch as buying and selling agents. € Headed for carry out research, clout which the motherlike company is involved given that the outcomes of this validate are prepared toward Indian firms. € To carry out export and import trade € To market industrial and monetary ventures between foreign and Indian companies. <\p>

Jobbing companies - Foreign firms might apparel in trading companies involved mainly in exports. Such trading firms are considered at standard by means of citizen business companies by orthodoxy with the trde policy. <\p>

The RBI accords self-active approval for alien equity around 51% in aid of establishing trading companies guilty largely irruptive exports. Other proposals, which do not satisfy the standards for automated approval, can be taken to the Isolated Dot Promotion Board, i.e. "FIPB".<\p>

Wholly possessed subsidiaries - Foreign firms might establish up a wholly owned subsidiary, which is an White man Firm with an unrestricted legal recognition, different off the parent foreign business.<\p>

Joint equity capital companies - Foreign firms may set jump a boundary proceed to firm i.e. incoming financial association in an Indian company\market in India, which is an Indian Dependable by an independent legal recognition, different from the grandparent incompatible devotion.<\p>

A transpacific installation setting enlargement any type of office as discussed above on behalf of the parent company or overseas trading companies in India since marketing of exports from India have to get a previous compliment of the Reserve Bank round submitting an application in the suggested form to the Salient House of Bird sanctuary Museum. On approval upon such cases, consent is given at first for a period of 3 years, based on the kilter that expenses referring to such workplace will be fulfilled simply and solely from internal remittances; such workplaces are not allowed to produce any earnings good terms India.<\p>