G7 Agreement on 15% Global Tax Rates for India: Experts
Global Tax Rates – A landmark treaty drafted by the G7, the world’s most prosperous country, to repay a 15 per cent lower corporate tax return will benefit India as the effective domestic tax rate exceeds the limit, and the government will continue to attract investment, according to tax experts.
On Saturday, the Seventh Party reached a landmark agreement to close the tax-free spaces used by some of the world’s largest companies. The Finance Ministers of the G7 countries, including the US, UK, Germany, Canada, France, Italy and Japan, have said they will reimburse 15 per cent of the global tax rates to international companies.
AKM Global Tax Partner consultant Amit Maheshwari said the agreement is expected to benefit India as it is a significant market for many technology companies.
Also, a minimum tax rate of at least 15 per cent means that it is likely that the Indian tax will still work, and India will continue to attract investment,” Maheshwari
In September 2019, India reduced domestic corporate taxes by 22 per cent and 15 per cent of new manufacturing units. The level of tax payment has also been extended to existing pet companies, subject to certain conditions.
Nangia Andersen India chairman Rakesh Nangia said that although the G7’s commitment to lower world gobal tax rates of 15% works well in the US and many other western European countries, it may face challenges from other low-income European states such as The Netherlands, Ireland and Luxembourg and some in the Caribbean rely heavily on tax arbitrage to attract MNCs.
“The international treaty will address the challenge of getting other major nations on the same page because this affects the king’s right to decide the national tax policy,” N Nangia said.
Since India’s effective tax rate is higher than the world’s lower tax rate, it will not impact Indian business. “The low level of globalization affects companies that use low tax power to achieve lower global tax costs. In addition, India attracts foreign investment due to its large domestic market, high-quality labour with competitive prices, good exports, and a booming private sector.” Said N Nangia.
EY India National Tax Leader Sudhir Kapadia said the global tax agreement is an incomplete one, especially in large and developing countries like India, which will always be difficult to get lower corporate taxes by adding to the direct foreign investment needed country.
Equally important is the transparent provision of taxation rights” in market countries.
The decision taken by the G7 countries will be put before the G20, a group of developing and developing countries, at a summit scheduled for July in Venice.
Although the G7 agreement will be a significant factor in the G20 / OECD negotiations, it will require a lot of work to reach an international agreement, Maheshwari said. However, a 15% lower tax rate may not raise the maximum amount of revenue, and other countries may require a much lower world tax rate,” he added.
Deloitte India Partner Rohinton Sidhwa said small tax profits should be increased by giving the first right to pay part of the profits of major MNCs around the world.
In addition, it will also eliminate various digital taxes that have gone up around the world, such as the Indian exchange rate, adding that it will also open the way for changes in land tax agreements according to the agreement reached.ched.
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