Cross Border Transactions

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2. Major Aspects of International Tax: Legal Provisions of different
countries that covers tax aspects of cross border transactions
Major aspects that make international tax
1.Cross Border Transactions
2. Transfer Pricing
3. Risk and Capital Structuring

3. New Approach of Governments Globally
BEPS
Addressing Base Erosion and Profit Shifting. (Shift profits to
locations where there is little or no real activity but the taxes are
low resulting in little or no overall corporate tax being paid)
In the recent past, MNCs like Starbucks, Apple, Microsoft, Google,
Amazon, etc. made news for their aggressive tax structures. It is
alleged that such structures are designed in a way so as to reduce
the taxable income by shift of profit to lower tax jurisdictions
Risk and Capital Structuring

4. Keep an eye on:-
UN Model and recommendations
OCED Models and recommendations
Countries Domestic Tax Laws.

5. BEPS ACTION PLAN (As per OECD Recommendations):
Coherence
Neutralising effects
of Hybrid Mismatch
Arrangements
CFC Rules
Limit base erosion via
Interest
Deductions (4)
Counter Harmful Tax
Practices (5)
Substance
Preventing Tax Treaty
Abuse (6)
Prevent artificial
avoidance of
PE Status (7)
TP Aspect of
Intangible Assets
TP/Risk and
Capital (9)
TP High Risk
Transactions
Transparancy
Establish
methodologies to
collect and analyse
BEPS data (11)
Require taxpayers to
disclose their
aggressive tax
planning
arrangements (12)
TP Documentation
Making Dispute
Resolution more
effective (14)

6. Indian Tax LAW Today After GAAR (Introduced in 2017 Finance Bill
India):c
TAX PLANNING, AVOIDANCE AND EVASION
Reducing Tax Liability
TAX EVASION TAX PLANNING TAX AVOIDANCE
Illegal and unacceptable Legal
Not Illegal per se- But
Could be against the spirit
of law
Availing tax benefits through unfair
means
Availing tax benefits
through compliance in law
and spirit
Availing tax benefits by
taking advantage of
loopholes in law
Stating an untrue statement knowingly,
submitting misleading documents,
suppression of facts, omission of
material etc.
Using fiscal incentive by
submitting to the
conditions and economic
consequences of tax
legislation
An outcome of actions
none of which or no
combination of which is
illegal or forbidden by the
law.
Always Prohibitted
GAAR Vs Legal
Positioning
GAAR Applicable
Equalization Levy and Safe Harbor Rates for Transfer pricing and other
related new rules for GAAR--- Watch out for it..

7. Basic Concepts of International Tax
Concepts that one needs to understand well to benefit from cross border transactions
1. PERMANENT ESTABLISHMENT
2. CONTROLLED FOREIGN COMPANIES
3. SOURCE ABD RESIDENCE TAX JURISDICTION.
4. DOUBLE TAX TRIETIES AND RELIEF

8. What do U need to know as a Business In India and Dealing
with for Foreign Companies:
Concerned Laws are Income Tax, FEMA and GST
Transfer pricing Applicability and Study
Tax Treaties and Withholding tax applicability and Tax Relief Methods.
When ever there is a benefit available due to treaty and the same
is not available in the Domestic LAW treaty will always override the
Domestic LAW.

9. Know it Right:
Section 3 of FEMA
Unless permitted by Act or Rules or RBI, the following transactions are prohibited and are not
compoundable:
v3 (a) – Dealing in Forex and Securities not through Authorized Dealer
v3 (b) – Making payments to or for the credit of any person resident outside
India in any manner
v3 (c) – Any forex receipt without any corresponding inward remittance
v3 (d) – Financial transaction in India with a corresponding creation of
asset/ credit outside India

10. Act With Caution While :
RED ALERT:
Transaction between a person resident in India and a Resident
outside India
Transaction by Resident in Forex
Transaction by Non Resident in Rupees
Transaction by Resident outside India
Transaction by Non Resident in India
Transactions outside India between Non residents in forex
without connection to India are not covered by FEMA.

11. FDI Reporting
Compliances
Direct Taxes GST
FIRC RESITRATION Test For PE
Test if we are Non
resident Taxable
Person.
Advance Reporting
Form
Transfer Pricing
Document.
Look at Export
Requirements.
Issue of Shares and
Call for Balance
Payments.
Withholding Tax
Payments
Returns Monthly/
Quarterly and
Annually.
Obtaining Unique
Identification
Number(UIN)
Income Tax Returns Audits.
Audits.
Required Compliance

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