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International Taxation

International Taxation refers to the different tax laws that an individual or a business has to comply with in order to operate outside the boundaries of his own country. This could be tax laws of the foreign countries or the difference in tax laws of the same country with respect to foreign business. We have services under the following heads:

1. Setting up operations in India by Foreign Company

2. Expatriate

3. Certifications

4. Transfer Pricing

5. Other Services

In the last decade an increase in the cross border transactions can be easily observed. With India becoming more and more “Entrepreneurial Friendly” a greater number of foreign nationals are attracted to start a business in such an environment. Hence International Taxation in India has gained more importance.

Setting up of operations in India by foreign company
Operations can be set up in India by foreign companies through:
Liaison Office/Representative Office
Project Office
Indian Subsidiary Company
Also, these companies have to register themselves with Registrar of Companies (ROC) within 30 days of setting up a place of business in India. Setting up business in India by foreign companies is gaining more and more importance today due to the start-up friendly schemes being introduced by the government. However if you encounter any issues under the head Expatriate, you can connect with us. We’ll help you with it.
Investing in an Indian Company
For investing in an Indian Company or for owning an Indian Company, a foreign national (other than a citizen of Pakistan or Bangladesh) or even an entity which is incorporated outside India (other than the one incorporated in Pakistan or Bangladesh) can acquire shares of the company in order to start business in, subject to the FDI Policy of India. Moreover, a minimum of one Indian Director (Indian Director and Indian Resident) is also required for incorporation of an Indian Company along with an address in India.
If you ever encounter such an issue about “How to register a foreign company in India”, contact us and we’ll help you with incorporation of foreign company in India.
Foreign Directors in Indian Companies
NRI’s, Foreign Residents and Foreign Nationals can act as directors of Indian Company under Companies Act-2013. But the person first needs to obtain a Director Identification Number (DIN) after obtaining Digital Signature Certificate. While setting up the company it must be noted that at least one of the members in the board must be an Indian resident and Indian citizen, whereas other board members can be of any nationality.
We at Startup Spine can help you with registration of foreign companies in India.
An expatriate refers to an individual who lives in some other country (different from his country of citizenship). Sometimes an expatriate is defined by an individual who has waived her citizenship in her home country in order to become a citizen of another. Sometimes Expatriates are given certain benefits sometimes, such as housing allowance or relocation assistance.
Expatriates in India
If somebody was working in Mauritius and also he/she is a citizen of Mauritius, then if he is now working in India, then he/she is an expatriate or is considered as expat. The person if working under some big foreign company will be provided housing facilities along with additional benefits in salary.
Today, as more and more people are seeing a scope in expanding their business overseas, we can find many expatriates emerging now-a-days. Most often the term expat is used to describe professionals sent by the big companies to their associated enterprises or foreign subsidiaries to initiate and establish their business name in foreign countries as well. Certifications also have an important role to play, so you can contact us for the same.
Expatriate Taxation
When we talk about the taxation for expatriates it includes the following aspects:
1. Salary Structuring and Payroll Processing
2. Foreign tax credits and treatment of Grossing up components
3. Tax Equalization Policy and Computations
4. Hypothetical Tax Computations
5. FRRO Registrations and Extensions
6. Certificate of Coverage
7. Income Tax Compliance
8. Secondment Agreements
9. OCI Card and POI Card
10. Assistance in International Tax Litigations
11. Arrival – Departure tax briefings
Difference between Immigrants and Expatriates
Immigrants is a term for those foreign citizens who come to India for employment, however if we talk about Expatriates, then expatriates then these are the individuals who bring the already established business in different or foreign countries.
However, many expatriates look for expatriate services in India so as to expand the business. Now for this, we at Starters’ CFO are there to provide you with all kinds of Expatriate Services.
Certifications for International Business refers to those necessary forms that one needs to fill in order to carry out transactions such as remittance of funds to non-residents (Form 15CA & 15CB) or a certificate by Chartered Accountants for all the assets and liabilities of an enterprise (Net worth Certificates).
Sending money outside India is sometimes a daunting procedure for both foreign businesses and expatriates living in the country. There are various schemes and regulations that limit how much money can be remitted and for what purpose. Certifications help in doing this remittance.
For services such as transfer pricing or certifications services, contact Starters’ CFO as we can help you with all sorts of your queries.
Importance of Certifications
1. Certifications help in making the process of International business faster
2. Net-Worth Certificates help in proper consideration of all assets and liabilities of organization
3. Form 15CA & 15CB are very useful when it comes to remittances of fund to Non residents
4. For International taxation, one needs to take care for all the certifications required
Restrictions and Regulations under FEMA
When we consider certifications such as Form 15CA and 15CB there are certain rules and regulations that one needs to take care of:
Prohibited transactions include:
1. Lottery winnings;
2. Income from racing; and,
3. For the purchase of lottery tickets, football pools, and banned magazines.
Also, payment of commission that needs to be made on exports towards equity investment in Joint Ventures (JVs) or Wholly Owned Subsidiaries (WOSs) are also prohibited.
Remittance transactions that require Central Government approval range from cultural tours to prize money/sponsorship from sports activities abroad where the amount exceeds US $100,000. Certain remittances and payments by Public Sector Undertakings (PSUs), such as advertisements in foreign print media, are also regulated by this Schedule.
Transfer Pricing
Transfer Price means the price charged by individual entities for goods or services supplied to one another in multi-department, multi-office, or multinational firms. Transfer pricing is setting of the price for goods and services sold between controlled/related legal entities within an enterprise. Just in case Subsidiary Company is selling goods to parent company then the cost of those goods paid by the parent to the subsidiary is the transfer price. Transfer pricing accounting needs to be appropriately done and if you are facing any issues in the same, we are here to provide you with all sorts of legal advice and services for the same.
When two or more associated enterprises companies enter into a joint contract during an global transaction in order to allocate a particular cost incurred in relation with a profit, service or facility presented by any one or all of the companies, such a cost shall be calculated taking into account the arm’s length price of the particular assistance, service, or facility, as applicable. Besides this there are other services as well under International taxation that we can provide, approach us in case you have any queries.
Provisions under Transfer Pricing Income Tax Act
There are a number of provisions that an organization needs to comply with under Transfer Pricing Income Tax Act 1961. For Example transfer pricing section 92c is regarding the computation of arm’s length price. Few of them are mentioned below:
1. Section 92 – Computation of income from international transaction having regard to arm’s length price.
2. Section 92A – Meaning of associated enterprise.
3. Section 92B – Meaning of international transaction.
4. Section 92BA – Meaning of specified domestic transaction
5. Section 92C – Computation of arm’s length price
Importance of Transfer Pricing
1. Transfer pricing helps in carrying out International Transactions
2. Transfer pricing can lead to more-effective foreign investment decisions
3. Increased tax and operating benefits resulting from business restructuring
Procedure for Transfer Pricing India
Transfer Pricing Methods include the following:
1. Market rate transfer price: using the market price to derive the transfer price
2. Adjusted market rate transfer price: Making adjustments in the market price according to estimations of the future
3. Negotiated transfer pricing: Negotiating the price set
4. Contribution margin transfer pricing: On the basis of contribution margin, transfer price is set
5. Cost-plus transfer pricing: Transfer Price made on the basis of cost of the components
6. Cost-based transfer pricing: Transfer its products to other subsidiaries at cost
Other Services
International Taxation is all about different tax laws that an individual or a business has to comply with in order to operate outside the boundaries of his own country. For this we provide other services as well which include:
1. RBI Approvals
2. FEMA Compliance
3. Permanent Establishments
4. Taxation Compliance of foreign companies
So International Taxation becomes really important when it comes to setting up of Operations in India by Foreign Company.