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
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).
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!
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.
Fiscally transparent entities
Fees for technical services – Managerial, consultancy and technical services – Make available clause
What is FIS ?
Significant economic presence
OECD pillar 1 and 2
G7 tax proposal
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
Section 90 – Amendments in alignment with MLI regime
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?
Master file and country by country reporting
BEPS AP 13 – Threshold 750 million euros
AMP – Intangiblesoptional file name