Tax Planning With Double Taxation Treaties

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EFS Consultants (India) Pvt. Ltd.EFS Consultants (India) Pvt. Ltd.(EFS)(EFS)

Foreign Direct Investments FDI in IndiaForeign Direct Investments FDI in India

April 20April 20

by Julie Rosenthalby Julie Rosenthal

© EFS Consultants (India) Pvt. Ltd. www.efs-consultants.com

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The 4 criteria for Holding The 4 criteria for Holding CompaniesCompanies

Withholding Taxes on Incoming Withholding Taxes on Incoming DividendsDividends

Corporate Income Tax on Dividend Corporate Income Tax on Dividend Income ReceivedIncome Received

Capital Gains on the Sale of SharesCapital Gains on the Sale of Shares

Withholding Taxes on Outgoing Withholding Taxes on Outgoing DividendsDividends


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Withholding Taxes on Incoming Withholding Taxes on Incoming DividendsDividends

Incoming dividends remitted by the Incoming dividends remitted by the subsidiary to the holding company must subsidiary to the holding company must either be exempted from or subject to low either be exempted from or subject to low withholding tax rates in the subsidiary withholding tax rates in the subsidiary jurisdiction. This is usually achieved by jurisdiction. This is usually achieved by having in place a double taxation treaty to having in place a double taxation treaty to which the subsidiary and holding company which the subsidiary and holding company jurisdictions are parties.jurisdictions are parties.


44

Corporate Income Tax on Corporate Income Tax on Dividend Income ReceivedDividend Income Received

Dividend income received by the Dividend income received by the holding company from the subsidiary holding company from the subsidiary must either be exempted from or must either be exempted from or subject to low corporate income tax subject to low corporate income tax rates in the holding company rates in the holding company jurisdiction.jurisdiction.


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Capital Gains on the Sale of Capital Gains on the Sale of SharesShares

Profits realized by the holding company on Profits realized by the holding company on the sale of shares in the subsidiary must the sale of shares in the subsidiary must either be exempt from or subject to a low either be exempt from or subject to a low rate of capital gains tax in the holding rate of capital gains tax in the holding company jurisdiction.company jurisdiction.


66

Withholding Taxes on Outgoing Withholding Taxes on Outgoing DividendsDividends

Outgoing dividends paid by the holding Outgoing dividends paid by the holding company to the ultimate parent company to the ultimate parent corporation must either be exempt from or corporation must either be exempt from or subject to low withholding tax rates in the subject to low withholding tax rates in the holding company jurisdiction. holding company jurisdiction.


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The 4 Key Jurisdictions For IndiaThe 4 Key Jurisdictions For India

CyprusCyprus

MaltaMalta

MauritiusMauritius

SingaporeSingapore© EFS Consultants (India) Pvt. Ltd. www.efs-consultants.com

88

Cyprus at a glanceCyprus at a glance

10% Corporation Tax with eligibility for 10% Corporation Tax with eligibility for lower rates under certain circumstanceslower rates under certain circumstances

0% withholding tax on interest 0% withholding tax on interest

0% withholding tax on incoming dividends0% withholding tax on incoming dividends


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SingaporeSingapore


1010

Singapore at a GlanceSingapore at a GlanceSingapore consistently ranks as one of the top most Singapore consistently ranks as one of the top most

competitive and profitable places for business. competitive and profitable places for business. Singapore today is a reputable financial centre, a key Singapore today is a reputable financial centre, a key regional trading centre, the world's busiest port, and a regional trading centre, the world's busiest port, and a

top location for investments and doing business.top location for investments and doing business.

Singapore's safe, pro-business environment is Singapore's safe, pro-business environment is supported by a well-respected government with supported by a well-respected government with transparent and consistent policies that protect transparent and consistent policies that protect

companies' physical and IP investmentscompanies' physical and IP investments


1111

Foreign Direct Investment (FDI)Foreign Direct Investment (FDI)

Foreign Direct Investments are usually Foreign Direct Investments are usually directed by Bilateral Investment Treaties directed by Bilateral Investment Treaties (BIT). BITs are agreements establishing (BIT). BITs are agreements establishing the terms and conditions for private the terms and conditions for private investment by nationals and companies of investment by nationals and companies of one state in the state of the other. This one state in the state of the other. This type of investment is called Foreign Direct type of investment is called Foreign Direct Investments (FDI). Investments (FDI).


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Flexible Holding Structure for Company with Indian Flexible Holding Structure for Company with Indian interestinterest

Malta Holding

Private Property Holding

Holiday HomeThailand

Trading CompanyEU

CommercialProperty Holding

General Trading Company

India


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An active typical foreign investment structureAn active typical foreign investment structure

Holding Company(Isle of Man)

Trading Co Russia

(Netherlands)

Trading CoTurkey

(Netherlands)

Trading Co Phillipines

(Netherlands)

Trading Co Singapore

(Netherlands)

Trading Co India

(Netherlands)

Trading Co Malaysia

(Netherlands)

Joint Venture(India)

Joint Venture(Malaysia)

Joint Venture(Turkey)

Joint Venture(Russia)

Joint Venture(Philippines)

Joint Venture(Singapore)

Holding Company (Malta)

Holding Company (Netherlands)

Holding Company (Mauritius

)

Shareholding structure

Royalty structure


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Utilising Double Taxation Treaties to Utilising Double Taxation Treaties to allow us toallow us to

Avoid withholding taxAvoid withholding tax

Minimise exchange controlMinimise exchange control

Expand abroadExpand abroad

Brand or IP acquisition abroadBrand or IP acquisition abroad

Build new marketsBuild new markets

Implement Privacy and ConfidentialityImplement Privacy and Confidentiality


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India’s Double Taxation Treaties India’s Double Taxation Treaties (Dec 08)(Dec 08)))

Armenia Australia Austria

Bangladesh Belarus Belgium

Brazil Bulgaria Canada

China Cyprus Czech Republic

Denmark Egypt Finland

France Germany Greece

Hungary Indonesia Israel

Italy Ireland Japan

Jordan Kazakhstan Kenya

Korea (South) Kyrgz Rep. Libya

Malaysia Malta Mauritius

Mongolia Morocco Namibia

Nepal Netherlands Romania

New Zealand Norway Oman

Philippines Poland Portugal

Qatar Russia Saudi Arabia

Singapore South Africa Spain

Slovenia Sri Lanka Sudan

Sweden Switzerland Syria

Tanzania Thailand Trinidad and

Tobago

Turkey Turkmenistan Uganda

U.A.E.United Arab

Republic UK

Ukraine USA Uzbekistan

Vietnam Zambia


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EFS Consultants on FDI IndiaEFS Consultants on FDI India

EFS Consultants Ltd LondonEFS Consultants Ltd London

150 152 Fenchurch Street150 152 Fenchurch Street

London EC3M 6BBLondon EC3M 6BB

United KingdomUnited Kingdom

Tel: +44 207 2207363Tel: +44 207 2207363

Fax: +44 870 4865532Fax: +44 870 4865532

www.efs-consultants.comwww.efs-consultants.com

EFS Consultants Pvt Ltd. MumbaiEFS Consultants Pvt Ltd. Mumbai

723 Midas, Sahar Plaza723 Midas, Sahar Plaza

Kurla Andheri RoadKurla Andheri Road

Andheri EastAndheri East

Mumbai – 400059 IndiaMumbai – 400059 India

Tel: +91 22 30727610Tel: +91 22 30727610

www.efs-consultants.comwww.efs-consultants.com

EFS Consultants ShanghaiEFS Consultants Shanghai

Unit 615, No.709Unit 615, No.709

Central Tibet RoadCentral Tibet RoadMeiXin PlazaMeiXin PlazaShanghai 200001Shanghai 200001ChinaChina

Email: Email: [email protected]@e-f-s.net


Tax Planning With Double Taxation Treaties

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