We are pleased to attach herewith the Tax & Regulatory Newsletter for February 16, 2017 – March 15, 2017  highlighting major recent tax and regulatory developments in India.

Tax & Regulatory Newsletter for February 16, 2017 – March 15, 2017

Inside this issue…

DIRECT TAX                                                                                                                                                      

  1. Capital Gains arising from indirect transfer of shares of a foreign company by another foreign company on account of internal group restructuring held to be taxable in India
  2. Payment to Non-resident for employee secondment characterised as FTS, ITAT rejects salary-reimbursement plea
  3. India’s Comprehensive Social Security Agreements with Germany and Portugal comes into force
  4. Supreme Court rules payments made for use of common facility not fees for technical services

INTERNATIONAL TAX

  1. Mauritian Regulator sets deadline for applications for Tax Residency Certificates (‘TRC’s) by newly-licensed Category 1 Global Business Companies (‘GBC1’)
  2. Singapore Budget 2017 proposes BEPS-compliant IP regime and R&D safe harbor
  3. European Union publishes Apple’s appeal against European Commission (EC) ruling in the Apple-Ireland state aid case

 TRANSFER PRICING

  1. The ITAT affirmed the need of attributing profits to Permanent Establishment if its actual functions performed falls beyond the scope of functions outlined in inter-company agreement
  2. Once the Tribunal adjudicates a matter on merits of the case then any rectification application to re-evaluate the facts of the case by the Tribunal is not sustainable
  3. The Tribunal clarifies the “power confinements” of the Dispute Resolution Panel which renders that the Panel has no authority to direct either Assessing officer or Transfer Pricing Officer to make any further enquiry or decide the matter
  4. The Tribunal elucidates that it is burden of the lower tax authorities to establish the fact that taxpayer’s Advertisement, Marketing and Promotional Expenditure is contributing towards promotion of the brand owned by associated enterprise
  5. Service rendition through oral communication possible.

INDIRECT TAX

  1. Turnkey contracts undertaken for Delhi Metro cannot be vivisected to levy service tax
  2. 1st July 2017: An optimistic date for GST implementation