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Real Estate Investment Trusts (REIT) and Infrastructure Investment Trusts (InvITs): Taking stock and opportunities

Date: 28 May 2019

Time: 11:30 a.m. – 12:30 p.m. IST  

In India, real estate investment trust (REIT) and infrastructure investment trust (InvIT) taxation regimes have been introduced to allow these structures (business trusts) to be set up in accordance with the SEBI (Real Estate Investment Trusts) Regulations, 2014 and SEBI (Infrastructure Investment Trusts) Regulations, 2014, respectively. While the regulations have been in place for some time, India has seen limited adoption of the regimes, particularly in the REIT segment. However, recent activity has rekindled interest in these taxation regimes. We'll discuss:

  • An overview of the Indian regulations relating to REIT/InvIT taxation and their gradual evolution in India.
  • Tax issues, practical insights, and potential solutions relating to the Indian regulations.
  • Perspectives from Australia and Singapore.

Learn about the practical issues as well as possible opportunities in REIT and InvITs that your company may face going forward.

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Previous webcasts

Profit Attribution - A move away from FAR? | 21 May 2019

Attribution of profits to a business connection and a permanent establishment under the mechanisms prescribed in Rule 10 and tax treaties, respectively, have been the subject of considerable debate over the years. Further, post the insertion of the Significant Economic Presence (SEP) definition, a coherent attribution mechanism was required to tackle the attribution of income to the SEP.

The Central Board of Direct Taxes (CBDT) constituted a committee to re-examine the rules of profit attribution and recommend changes in domestic law. In this regard, the report submitted by the committee had been released by the CBDT for comments from the public. The attribution mechanism prescribed has a significant impact on non-resident taxpayers, including taxpayers operating in India, in the digital domain.

We discussed:

  • Observations or recommendations of the report
  • The existing legal framework and practices in India for attribution of profits
  • Analysis of the report’s proposals and the way forward

Tune in to the recording to learn more about the issue, the legal framework, interaction with tax treaties, and how this may affect MNCs operating in India.

Navigate business traveling today and how to stay on top of it | 9 May 2019

The fast-growing digital economy has prompted countries to act on issues arising from the As organizations use business travel in an ever increasing manner, authorities around the world are increasing their focus on business travelers, placing greater scrutiny on them and their employers. Additionally, employers are expected to have full oversight of their business travelers such as actively managing consequent compliance risks associated with immigration, tax, social security, payroll, and permanent establishment. Achieving improved compliance requires a holistic approach comprising change management techniques to steer traveler behavior, effective use of technology to manage the large volume of travel data, and downstream processes to undertake compliance actions. We'll discuss:

  • How authorities focus on business travel has evolved and the implications. 
  • Global hotspots and where employer focus on compliance is best placed. 
  • How organizations are responding to the challenges. 
  • Building a path to improved compliance and success.

Tune in to the recording to gain insights from Deloitte professionals on how your organization can keep on top of the shifting landscape, enhance governance, and strengthen compliance in business traveling.

Taxing royalty payments in a digital world: Keeping up with the changes in India | 7 May 2019

Digital economy relies heavily on intangibles, big data, and rapidly evolving technological advancements with decreased need for local personnel to perform certain functions. However, user participation is an important value driver for various types of online platforms which contributes in the service-offerings and brand building for a multinational in the digital sector. 

A group company of a multinational therefore, should be entitled to its share of profits of a business that result from the unrecognized value being created by these companies irrespective of where the business's goods and services are ultimately sold. In recent judgements, Indian judiciary also analyzed the business functions and value drivers of these multinationals in digital space and its Indian arm and re-characterized the payments from India as income from value creation in India. We'll discuss: 

  • The transformation in business models and the need to revaluate the value drivers for business towards profit entitlements.
  • Various royalty models and emphasis on variable royalty.Which model is more relevant in the digital world?
  • Current developments from the Asia Pacific region.

Tune in to the recording to learn more about the developments in the digital world and how they may affect you.

G20/OECD: Tax challenges of the digitalization of the economy update | 16 April 2019

The last few months have seen several developments in Indian tax jurisprudence. Given the common law system in India and the hierarchy of courts and the tribunal, the same issue may come to be decided by multiple authorities and at multiple levels. This makes it necessary to always be aware of the evolving judicial views. There are also many changes in the statutory provisions, particularly in the area of GST. We discuss:

  • Recent income-tax rulings, including on research and development expenses and on conversion of a company into an LLP.
  • Recent important amendments in GST provisions.
  • Update on anti-profiteering cases.
  • Significant GST advance rulings.

Tune in to the recording.

How India APA/MAP resolution is benefitting UK based MNEs | 5 April 2019

The APA and MAP program in the past year has witnessed quicker resolutions for applicants seeking relief under India APA/MAP program. Various MNEs, including those headquartered in the UK, have benefitted through this program in attaining tax certainty with relation to their India operations. 

This webinar will provide interesting insights into the approach adopted by authorities, recent APA/MAP trends, and key considerations for MNEs participating in the program. 

Based on our recent experiences, the session will cover/highlight some of the complex tax issues that are currently faced by MNEs. This will include the following Transfer Pricing issues:

  • Marketing intangibles [Advertisement, Marketing and Sales Promotion (AMP) expenses] 
  • Intra group services 
  • Royalty for intellectual property

 

India tax update: Latest developments and impact | 19 March 2019

The last few months have seen several developments in Indian tax jurisprudence. Given the common law system in India and the hierarchy of courts and the tribunal, the same issue may come to be decided by multiple authorities and at multiple levels. This makes it necessary to always be aware of the evolving judicial views. There are also many changes in the statutory provisions, particularly in the area of GST. We discussed:

  • Recent income-tax rulings, including on research and development expenses and on conversion of a company into an LLP.
  • Recent important amendments in GST provisions.
  • Update on anti-profiteering cases.
  • Significant GST advance rulings.

Provident Fund applicability on allowance: Supreme Court ruling | 15 March 2019

In a landmark ruling, the Supreme Court has recently concluded that all allowances such as conveyance, medical, education etc. are to be included for PF calculation unless such payments are:

  • Variable in nature, or are linked to incentive for production resulting in greater output by the employee
  • Not paid across the board to all employees in a particular category
  • Being paid especially to those who avail the opportunity

Organisations with employees with a basic pay lower than INR 15,000 per month and foreign nationals (non-Indian passports or OCI card holders) need to understand the impact of the ruling, review the positions adopted, and determine the way forward.

We discussed:

  • Background and facts
  • Principles arising out of the ruling
  • Impact on employer /employees
  • Challenges and approaches

Excise Investigation in Auto Sector: Insights and way forward | 28 February 2019

Various auto component manufacturers are under investigations that have been initiated by the Director General of Goods & Service Tax Intelligence (“DGGI”).

Summons/notices are being issued to challenge the valuation of assessable value for levy of excise duty. According to the DGGI, the cost of drawing/design/specifications that is provided free of cost to the component manufacturers by the vehicle manufacturers should form part of the assessable value. Today, when the excise law has been replaced by GST law, this issue raised by the DGGI at such a large scale is disrupting the regular business and leading to litigation for the auto industry.

We’ll discuss:

  • An insight into the allegations raised in the notice/s;
  • Legal framework w.r.t. valuation under Central excise; and,
  • Way forward.

Common themes in GST across China and India: What you should know | 26 February 2019

The changing profile of GST/VAT system across Asia Pacific region in recent times has made it necessary for businesses to alter their business strategies and their compliance planning. While GST continues to be a hot topic across the region, China and India being the largest economies in the region, are of specific interest to all businesses. China has been engaged in VAT reform for quite some time and many more changes are expected in 2019. India has just completed the introduction of a large scale GST which has altered the business landscape and increased compliance for many businesses. There are quite a few common themes emerging in the GST reform landscape of these Asian giants although the GST in these countries is quite different. We'll discuss:

  • The business impact of these changes from a planning and compliance perspective.
  • Common themes emerging from these countries.
  • Practical case studies.
  • Opportunities and the way forward.

Cross-border mergers in Asia Pacific: Steering towards the future | 19 December 2018

US trade policies have created an impact on the Asia Pacific region. From implementation of the Wassenaar Agreement to the release of a second tranche of list of goods subject to additional import tariffs. Transformational changes to trade policies have created a stir in various sectors such as export of automobiles, steel based products, etc. These changes have the ability to alter the geographical supply chain of products from one region to another. How the trade policies implemented by the US will be reciprocated by the countries in Asia Pacific? We'll discuss

  • Cross imposition of import tariff on US origin goods.
  • Shift of supply chain from one country to another country.
  • Impact on manufacturing operations of business impacted by such tariff fluctuations.

Stay updated on the transformation impact of the US trade policies on various countries and the reciprocating trade measures taken by the effected countries.

Cross-border mergers in Asia Pacific: Steering towards the future | 29 November 2018

The Ministry of Corporate Affairs and Central Bank of India have rolled out rules to permit cross-border inbound and outbound mergers between Indian companies and foreign companies. This is expected to boost foreign investment in India. Further, it is a move that government has taken to showcase itself as an investment friendly jurisdiction. These regulations enable MNCs to look for business consolidation across the globe and enable Indian businesses to consider expanding their wings in the overseas market with more ease. We'll discuss:

  • An overview of the rules and how does this impact Indian and foreign companies.
  • What are the new avenues and potential limitations?
  • The tax issues and interplay with overseas laws.
  • Practical case studies.

Learn about the important developments on the cross-border mergers in Asia Pacific and how they may affect your organization.

Profit split method: New OECD guidance and practical applications | 27 November

The OECD BEPS reforms have increased the scrutiny of transfer pricing outcomes on a global basis. Relying solely on a one-sided transfer pricing analysis may no longer be sufficient in many jurisdictions. Consequently, the profit split method is likely to be used more often to set and review transfer pricing arrangements. The OECD has recently released further detailed guidance on the application of the transactional profit split method. During the webcast, we'll discuss:

  • Revised OECD and local country guidance on the application of the profit split method.
  • Identifying and accounting for intangible assets and contributions.
  • Potential data sources and issues involved in practical application.
  • Best practices, key experiences, and case studies.

Keep abreast of the developments in this important area of transfer pricing.

Tax rulings and social security agreements: Shifting sands for India inbound moves | 20 November 2018

Investment into India is increasingly a priority for many MNCs given that India is moving up the scale on "Ease of Doing Business". A natural consequence of this will be the transfer of more senior level executives to India which will create increased compliance requirements with regard to tax and social security obligations.

Digitization of compliance, enhanced data mining, closer connectivity between immigration, tax, and social security authorities, have all allowed the Indian authorities to better detect instances of non-compliance and to assess tax liabilities. Monitoring compliance, tracking defaulters, and levying real time penalty is an extremely robust process in India.

A significant focus area for MNCs will be in meeting the tax and social security obligations for senior employees transferred to India, managing risk with regard to a Permanent Establishment (PE) exposure, and having robust documentation to support secondment arrangements. The importance of documentation right from the assignment to repatriation stage cannot be overemphasized. We'll discuss:

  • An overview of the compliance framework.
  • The common challenges faced by companies seconding personnel to India.
  • Practical case studies.
  • Potential pitfalls that need to be avoided from a PE exposure perspective.
  • The right approach to leverage on tax and social security costs.

Gain insights on the significant recent developments concerning tax rulings and social security agreements in India.

 

Recent Karnataka High Court (“KHC") ruling in Softbrands case on admissibility of Transfer Pricing matters: Critical analysis and insights | 12 July 2018

The pendency of tax matters especially the Transfer Pricing cases have increased significantly in the recent times. It is learnt that more than 3,500 Transfer Pricing cases are pending at the KHC, with the first admitted Transfer Pricing case pending for final hearing for over 9 years now.

With the view to reduce the pendency of tax matters before the KHC, a dedicated tax Bench was constituted in June 2018 with Justice Mr Vineet Kothari and Justice Ms Sujatha.  The KHC, after an elaborate hearing of over 3 days, has delivered a landmark judgement in relation to admissibility of Transfer Pricing cases, specifically on whether the questions on comparability analysis of companies and filters to be adopted for the benchmarking exercise, would constitute a ‘Substantial Question of Law’ so as to be admitted by the HC.

The discussion covers:

  • Detailed analysis of the KHC ruling
  • Observations and impact analysis

The ruling has widespread ramifications for transfer pricing cases, in particular, and tax cases in general, where Tribunal has delivered their decisions. 

Prosecution for Income-tax offences: Steep rise in complaints and convictions | 9 May 2018

A threefold increase in the number of prosecution complaints has occurred only in the first eight months of FY 2017-18. Until November 2017 a total of 2225 prosecution cases have been filed by the Department as against 784 filed in entire FY 2016-17. In the zeal of achieving tax recovery targets and tackling the black money menace, department is issuing prosecution notices for non-compliances like non-filing of returns, non-payment of taxes, etc.

The discussion covered:

  • procedure under tax laws for prosecution and defences
  • practical cases on mitigating prosecution

The approach of treating income tax offences on par and as grave as economic offences has widespread ramifications.
It is better to be updated and ready than react when prosecution notices arrive.

Union Budget 2018: Key highlights | 1 February 2018

Union Budget 2018 will be presented on 1 February 2018. The last fiscal year witnessed a slew of reforms on the tax and regulatory front. With the current government entering its penultimate year, the trend is set to continue.

Goods and Services Tax (GST) regime in India was implemented in July 2017. The release of the final rules on country-by-country reporting and master file requirements in India are significantly aligned with BEPS Action 13 guidance, reflecting India's commitment to global consistency.

GST, Real Estate Regulation Act, demonetization, bankruptcy code, recapitalization of bonds of public sector banks, and relaxation of foreign direct investment norms are challenging old practices and transforming the way India is doing business.

In these times of massive reforms, interest is further mounting to see what’s next on the cards. What economic reforms will the budget bring? How will it affect the business landscape in India?

 

Union Budget 2018: Detailed analysis and insights | 2 February 2018

Union Budget 2018 will be presented on 1 February 2018. The last fiscal year witnessed a slew of reforms on the tax and regulatory front. With the current government entering its penultimate year, the trend is set to continue.

Goods and Services Tax (GST) regime in India was implemented in July 2017. The release of the final rules on country-by-country reporting and master file requirements in India are significantly aligned with BEPS Action 13 guidance, reflecting India's commitment to global consistency.

GST, Real Estate Regulation Act, demonetization, bankruptcy code, recapitalization of bonds of public sector banks, and relaxation of foreign direct investment norms are challenging old practices and transforming the way India is doing business.

In these times of massive reforms, interest is further mounting to see what’s next on the cards. What economic reforms will the budget bring? How will it affect the business landscape in India?

 

India releases draft rules on Country-by-Country reporting and Master File for public consultation | 12 October 2017

The Central Board of Direct Taxes (“CBDT”) on 6 October 2017 released draft rules in respect of CbC reporting and Master File related requirements in India, for public consultation. The draft rules provide detailed instructions for compliance with these requirements and are open for public comments till 16 October 2017. 

Topics discussed:

  • Provisions relating to Master File
  • Provisions relating to CbC reporting
  • Impact on Indian Multinational Enterprises (MNEs)
  • Impact on MNEs headquartered outside India
  • Key suggestions/recommendations on the draft rules 

 

BEPS – India spotlight | 26 September 2017

India has been one of the active members of the OECD’s BEPS initiative and as part of international consensus, India has successfully implemented various BEPS Actions Plans to address the BEPS issues.

Our discussion will cover:

  • Multilateral convention to implement tax treaty related measures to prevent BEPS
  • Other key issues - MNCs with Indian operations will also be impacted by other changes such as interest deductions for related party debt and changes to the definition of permanent establishment.
  • Treaty abuse
  • Aligning transfer pricing outcomes with value creation.
  • Three tier transfer pricing documentation.

 

Permanent Establishment and Transfer Pricing audits | 30 August 2017

Controversy around existence of permanent establishment keeps on resurfacing. The Supreme Court in a recent decision in Formula One World Championship Ltd. has laid down guiding principles for qualifying as a Permanent Establishment (PE) in India, attribution of income and withholding tax. This decision is of considerable importance in the field of furthering international tax jurisprudence.
With the emergence of new safe harbour rules, CBC reporting, risk based scrutiny and BEPS, the manner of TP scrutiny assessments will undergo a change. Recent litigation also suggests a change in the trend and focus of the tax authorities.

Topics covered in discussion:

  • Decision of the Supreme Court in Formula One World Championship Ltd v. CIT (394 ITR 80)
  • Changing scenario of transfer pricing litigation in India in the light of revised Safe Harbour Rules, impact of BEPS especially CbC reporting and risk based assessments. 
  • Some recent rulings and litigation trends in the field of Transfer Pricing.

US Tax Reforms and what they mean for India | 18 July 2017

Tax reform still looms large in Washington. The White House and congressional Republicans maintain their commitment to enacting comprehensive tax reform by the end of this year. But consensus is still lacking as to what a reformed tax code should look like.

Following topics were discussed:

  • Proposed corporate and individual rate changes—and base broadeners—in the major tax reform plans that have been released to date. These include disallowance for imports and exemption for exports, accelerated depreciation, restriction on R&D credits, tax rate changes etc.;
  • Conditions that could hasten or hinder action on tax reform this year;
  • Procedural options available to lawmakers in the pursuit of tax reform legislation; and
  • Impact of these proposals from an Indian perspective. 

Tax Litigation in India- Changing Landscape | 27 April 2017

In India courts have played crucial role in the development of jurisprudence. Many a time conceptual issues have been settled by the courts. The decisions of tax tribunals and courts have provided clarity on legal issues and on interpretation of facts not only for the Indian taxpayers, counsels and tax authorities but also to those in other countries. The landmark decisions of the Indian courts are quoted in tax journals across the world as well as by courts in other countries. Courts in India are alive to developments in other countries and draw strength for reaching decisions. The decisions by the courts provide much needed resolution from litigation to taxpayers. Fortunately the tax department has been taking steps to reduce litigation.

Following topics were discussed:

  • Some recent landmark decisions on International Taxation;
  • Some recent landmark decisions on Transfer Pricing;
  • Important lessons from the above decisions; 
  • Recent steps by the tax department to reduce litigation;
  • Proposed change in penalty provisions – the ramifications.
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