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New norms for taxing MNCs
Why is it in the news
- The income tax department proposed a change in the methodology for taxing multinational companies (MNCs).
- The MNCs having permanent establishment in India by giving weightage to factors like domestic sales, employee strength, assets and user base.
More in the news
- As per the CBDT, MNCs that are incurring global losses or a global profit margin of less than 2% and have operations in India will be deemed to have made a profit of 2% of Indian revenue or turnover and will be taxed accordingly.
- The Income-Tax department has Invited public comments on draft report of taxation methodology for multinational companies (MNCs) having permanent establishment in India.
- CBDT has given weightage to factors like domestic sales, employee strength, assets and user base to determine taxation of MNCs.
- It is expected to impact several permanent establishments especially of infrastructure projects which have incurred losses recently.
- In case of digital companies, the weightage will be given to an additional fourth criteria of ‘user’ base.
- That is an MNC having a fixed place of business in India is considered as having Permanent Establishment in India and is taxed as per domestic laws.
Source
The Hindu.