How to Make Yourself for International Tax

Mergers and Acquisitions tax

Keep yourself updated with the latest deals – For example – Air India

Link these recent deals with the background from where they started – What were the bottlenecks?

There are different rules for listed and unlisted companies

Think from the shareholder point – What will they think?

What does Companies Act’2013 and Income-tax Act say about the definition of merger, amalgamation, acquisition, takeovers?

Think if you have to take over a company –How will you do it? – Open Market buy, Agreement with majority shareholders, etc.

Think about the assets and liabilities

Slump sale – Be familiar with new slump sales rules – Rule 11UAE – FMV

The first question in the interview can be – Have you read the Bharat Bijlee case and how it has been impacted by the amendments made by Budget 2021

Demerger and relation with sick units

Stamp duty – It is different in each state – Which state?

Ways – Asset sale (Itemised sale), Business sale, share sale

Please brush the taxability of AOPs

Section 47 of the Income-tax Act

Conversion of company into LLP

NCLT – Is NCLT approval required in all M&A deals – No!

Be familiar with Securities law, take over code

Cross-border merger – Can an Indian company merge with a foreign company?

Competition law – Definition of combination, the concept of appreciable adverse effect on competition (“AAEC”) in India, Financial thresholds – India asset test, Global asset test, etc.

Exchange control x M&A

NDI rules – Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (“Non-Debt Instruments Rules”)

What is FDI ? – Equity investment

Is FDI and Foreign Investment – Same? – No!

Check sectoral caps

Automatic route or Approval route

FPI ?- 10% threshold

Rules for Non-residents – Example – Can a PROI invest in LLP?

What about investments in Nidhi company – No! Check for prohibitions

Exchange control

ODI Scheme – Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 (“ODI Regulations”)

LRS Scheme – For Individuals (2.5 Lakh USD) – Why

NRO/NRE ACCOUNT – 1 million USD limit (NRO).

International tax

Capital gains – Must!

Section 9 – Business connection, Royalty, Interest, FTS

Indirect transfer provision – 100 million thresholds, the substantial value derived from Indian assets

What is direct transfer – Is it taxable – Yes!

Section 47

Implications of capital gains on slump sale

Implications of capital gains on the itemized sale

Section 79 – Carry forward of losses – Remember! 51% change in shareholding

Article 5 – Types of PE, Preparatory and auxiliary activities, Formula 1 ruling, place of disposal, etc.

Article 7

Fiscally transparent entities

Opaque entities

Royalty

Fees for technical services – Managerial, consultancy and technical services – Make available clause

What is FIS ?

Residential status

Equalization levy

Significant economic presence

OECD pillar 1 and 2

G7 tax proposal

Crypto

Online gaming

Intangibles

Work from home and PE exposure

International tax x BEPS/MLI/PPT

BEPS – why?

MLI – effect on PE definition

PPT – What is it?

How is PPT different from the domestic GAAR of India?

Classic Example – 365 days condition in case 0f dividend

What is the importance of a beneficial owner? – Developments across the globe

Trusts

Section 90 – Amendments in alignment with MLI regime

Transfer Pricing

Background

Why did it come?

If two-country tax rates are the same – How can we say that profits have been shifted ?- Value chain

Risks and Rewards commensurate to the value-added by each entity

Margin calculation – Only operating items to be considered

Methods of TP and utilities

Two twin brothers – Can you apply for CUP?

OECD guidelines on COVID and Transfer pricing

No comparable – what to do?

FAR analysis

Master file and country by country reporting

BEPS AP 13 – Threshold 750 million euros

Tested party

AMP – Intangibles