BEPS IS IN THE OFFING AND INDIA IS GEARING TOWARDS BEPS: AKHILESH RANJAN

7 November 2014, New Delhi: The BEPS Actions aim to bring in a clear, responsive and transparent regime to facilitate certainty for businesses to function across various jurisdictions. “BEPS is in the offing and the Rules are just months away. Businesses should gear up, prepare themselves for the changes in the tax legislation, and Government is equally open to consider views of the industry”, said Mr. Akhilesh Ranjan, Joint Secretary, Ministry of Finance. Mr Ranjan was addressing the gathering at the inaugural session of the Conference on Base Erosion and Profit Shifting (BEPS) – Impact on Tax Landscape, organized by the Confederation of Indian Industry (CII) in New Delhi today.

Addressing the skepticism of the industry on BEPS, Mr Ranjan highlighted that “BEPS is a movement and not a business vs tax administration debate. We must understand where the world is moving, and not just India, the Rules are important for multi-jurisdictional transactions of both domestic and international companies. It consists of a set of rules that would be acceptable worldwide”.

The conference echoed the growing voices of MNCs and Indian corporates alike for a stable, certain and less litigious tax environment to ensure that investors in the Indian economy are well positioned to plan their investments and estimate tax outcomes in a reasonable and consistent manner, which would facilitate in understanding the evolving tax landscape around the world and in India.

“The OECD and G20 countries are focused on solving the BEPS issue in a structured and timely manner. This is evident from the fact that they have been able to align more than 40 countries across the world for this impressive project. It’s just a matter of time before their recommendations are adopted by the respective countries in their tax policies and practices. It is the right time for the Indian industry to understand BEPS and its implications and equip itself for these global tax changes.” said a Deloitte spokesperson.

Speaking at the conference, EY spokesperson, suggested that there should be a clear distinction made between unreported income escaping tax and the reported income under business arrangements, where there are two opposing views on taxation. Whilst there can be no doubt about the need to monitor the former category, there is a need for sensible and balanced implementation of BEPS principles on the latter category.

Addressing the gathering, Mr John Staples, Senior Policy Adviser, Corporation Tax Strategy, HM Treasury, UK said that in the backdrop of the current global economic meltdown, concerns have been raised on bringing a fair and transparent international tax system to support the growth of businesses globally, with a uniform set of rules. ‘BEPS aims to provide more level playing field across borders. It is an opportunity to homogenise the tax rules internationally, and minimize disputes.’

Echoing the voice of the Business and Industry advisory Committee to the OECD (BIAC), Mr Archie Parnell, Vice Chairman, BIAC Tax Committee & Managing Director, Goldman Sachs stressed that BEPS presents a great opportunity and businesses across the globe should be involved systematically. ‘The BEPS project aims at rationalizing international tax rules, which have lost their relevance in the fast evolving business scenario. During the last year, though there has not been universal agreement, business has been heard in the BEPS actions; and the country by country reporting rules have been made more concise, though not minimized.’

MNEs use a wide range of cross border tax planning techniques that result in little or no tax liability – such results are referred to as “Base Erosion and Profit Shifting”.

OECD and G20 jointly established BEPS project to address global concerns. In October 2013, the UN Committee of Experts on International Cooperation of tax matters established a sub-committee on BEPS issues for developing countries. The sub-committee is mandated to work with relevant bodies and OECD with a view to highlight issues on BEPS with officials in developing countries.

Justice for All, Appeasement of None: Piyush Goyal

In an extremely topical and interesting session titled ‘A New India: Free, Fair and Prosperous?”, Mr Piyush Goyal, Minister of State for Power, Coal, New and Renewable Energy of India, emphatically said that the stress of the new Government is on creating an India that is for all, where every Indian participates in its growth story and prospers.

He was speaking at a session at the India Economic Summit, organized by the Confederation of Indian Industry and the World Economic Forum in New Delhi today and was joined by Sunil Bharti Mittal, Founder and Chairman, Bharti Enterprises, India and social activist Aruna Roy as panelists, offering their perspective on the issue. The session was moderated by Nik Gowing, presenter BBC World News.

Assessing his Government’s progress in its first few months, Minister Goyal said that this is a Government which believes in transparency, action and results, and has succeeded in inspiring confidence across the globe with the initial steps it has taken. People are optimistic that a new beginning has been made, and that far-reaching changes will soon be visible.

Activitist Aruna Roy questioned that view and said she was sorely disappointed in the Government which seemed to marginalize and neglect certain sections such as the poor, women and minorities. She talked of two-Indias – one prosperous, pro-business, the other poor and deprived. There are several issues that need to be addressed suitably in order to have an India where “women, the poor and the minorities feel free, confident and safe, and with a say in the part of the process.” These include the pending Lok Pal Bill, the now void MGNREGA scheme, the lack of transparency and clear road map by which to judge the Government’s performance, the way people were being displaced for ‘development’ projects, jobs made defunct due to the flooding by Chinese goods and rising ethnic tensions which seemed instigated for political mileage.

Responding to her, Minister Goyal stated that he did not see two Indias or any contradictions and that Government was taking a holistic and long term view. He said that infrastructure projects are aimed at improving the living standard of the poor. He stressed that this Government is pro-poor and has undertaken several initiatives such as the Jan Dhan Yojna to help get them into the mainstream. On sharing information and details with the people, he said that his Government spoke through its actions, and communicated with the people through several platforms. Infact, he said, this was the only Government that held press conferences after 100 days in power and interacted with the media. Reacting strongly to the view that ethnic tension was being instigated for political reasons, he refuted the charge and said that people should stop looking at India narrowly. “This divisive agenda has to stop”, he said, adding that Modi stands for justice for all, development for all and appeasement of none.

The focus, he reiterated, is on engaging, enabling and empowering people for long-term benefits, bringing about transparency and policy related changes that would benefit all. Urging people to be more patient in judging them, he said on a lighter note, “This is a 5-day match, not a T-20.”

Sounding an optimistic note and showing immense faith in the new Government, Sunil Bharti Mittal, Founder and Chairman, Bharti Enterprises, India said that this Government is involving and reaching out to everyone by focusing on business and society and people through campaigns such as Swachch Bharat, the Jan Dhan Yojna etc. Admitting that much needed to be done to address issues such as corruption he said corruption starts with discretion and that the Government’s effort to move to the e-platform was a step in the direction of eliminating corruption. He said he was optimistic that positive changes are underway.

Need to communicate that economic reforms are not against the common man: Chandrababu Naidu

There is a need to communicate that economic reforms are not against the common man but actually helps them. This was stated by Mr. Chandrababu Naidu, Chief Minister of Andhra Pradesh at a session in the India Economic Summit being organized by the World Economic Forum and the Confederation of Indian Industry in New Delhi today. Mr. Naidu was in conversation with Mr. Vikram Chandra, Presenter and Editor, NDTV.

Mr. Naidu pointed out that economic reforms create wealth and are therefore necessary. However, there is a need for the political system to respect the mandate given to them. Therefore, it becomes all the more necessary to enter into a dialogue with the people to let them know how the reforms can benefit them. Highlighting some of the initiatives that he had undertaken ever since his government took office, he stated that he had a unique challenge of building a new state as well as a new capital.

He has now set up seven missions in areas such as urban development,  infrastructure development, industry and knowledge economy among  others. In addition he was seeking to set up five grids in the areas of water,  roads, power, gas and fibre optic networks. All of these missions and grids  were designed to interconnect the state and bring the benefits of reforms to  rural areas.

He pointed out that he was working in mission mode in areas such as  agriculture, poverty eradication and irrigation among others.

While praising the Prime Minister’s initiatives, he stated that he had adopted these initiatives in Andhra Pradesh but had tweaked them to suit the conditions in the state. For example, Make in India has been tailored to Make in Andhra Pradesh.

He stated that his government was working on taking advantage of the long coastline of Andhra Pradesh and making Andhra Pradesh a port hub and a gateway into India. Ten additional ports were being developed to augment the four existing ones. The Chief Minister stated that he was adopting the PPP method to develop the infrastructure in his state.

 

 

Russians will always be welcome in India: Nirmala Sitharaman, Minister of State for Commerce and Industry, Government of India

Indian Companies Will Enjoy All Possible Support in Russia: Dmitry Rogozin, Deputy Prime Minister of the Russian Federation

Red Tape and Foreign Currency Major Hurdles to Business between India and Russia: Dmitry Rogozin, Deputy Prime Minister of the Russian Federation

At the 8^th India-Russia Forum on Trade and Investment held in New Delhi on 5th November , Mr. Dmitry Rogozin, Deputy Prime Minister of the Russian Federation promised all possible support to Indian companies attempting to set up presence and operations in Russia.

Ms Nirmala Sitharaman, Minister of State for Commerce & Industry addressing the 8th India Russia Forum on Investment & Trade on 5 November, 2014 at New Delhi

Referring to red tape as a major business adversary, he said, “We will give personal assistance to every case to solve any bureaucratic problems.”

Appreciating Prime Minister Narendra Modi’s results-oriented approach, he called the “Make in India” campaign a major patriotic and economical initiative. He called for more spirited energy in building business relationships between Russia and India, especially for the small and medium enterprises.

Ms. Nirmala Sitharaman, Minister of State for Commerce and Industry, Government of India recalled Russian classics in literature and music to emphasize the historical linkages of India and Russia. Acknowledging red tape as the elephant in the room to be removed from both countries, she stressed on leveraging complementary strengths to increase business cooperation. She called to understand mutual strengths in terms coupling the technology that Russia can offer and blending that with Indian entrepreneurship, along with the new government’s business-friendly policies as a the means to strengthening commercial relationships.

Drawing attention to the Make in India campaign and inviting Russian companies to set up in India, she said, “Manufacturing will be the next buzz in India. We hope to increase share of manufacturing from 15% to 25% of GDP.” Referring to the various policies that have been relaxed in India, including establishing an online, single-window clearance mechanism, 24/7 digital facilitation of customs, de-licensing in defense, further liberalization in FDI, she said that Russian are always welcome in India.

Mr. Sergei Cheremin, Chairman, Business Council for Cooperation with India and Minister for Economic Development of the Moscow Region drew attention to the various unexplored states and regions in both countries. A business delegation of nearly 100 Russian companies is in India, indicative of a renewed interest in doing business with India.

Mr. Satish Reddy, Chairman, Dr. Reddys Labs emphasized that the private sector must deepen ties to increase trade and investment.

The prospects for India-Russia commercial collaboration in manufacturing, defense, aerospace, pharmaceutical industry, IT and ITeS were also highlighted at the Forum. The Forum was organized jointly by CII and FICCI, in collaboration with the Ministry of Commerce and Industry, Government of India, the Ministry of Economic Development of the Russian Federation.