Foreign investments

Retrospective tax law change will help India attract more foreign investment: UKIBC

The retrospective amendment to Indian tax law, which rescinds the tax demand raised for the indirect transfer of Indian assets made before May 28, 2012 subject to specified conditions being met, may help attract more foreign investment to India as it sends a clear message that the country welcomes businesses, said the UK India Business Council (UKIBC).

Negotiations on the draft free trade agreement (FTA) between India and the United Kingdom, which are due to start soon, would also be boosted, as the passage of the legislation strengthens the credibility of a positive outcome and welcome, according to a statement released by the UKIBC. .

“At UKIBC, we believe this is an extremely positive step in promoting India as a progressive business environment. UKIBC has a long history of working with the Indian government on this issue. Companies need certainty when making investment decisions and to protect their shareholders. The Tax Laws (Amendment) Bill sends a clear message that India is truly open and welcoming for business, ”said UKIBC President Richard Heald.

The Tax Laws (Amendment) Bill 2021 was presented by Finance Minister Nirmala Sitharaman to Lok Sabha on Thursday. The bill, which was passed by the lower house without any discussion, seeks to withdraw tax demands made using retrospective 2012 legislation aimed at taxing the indirect transfer of Indian assets. The government informed Parliament that Cairn Energy Plc and telecommunications giant Vodafone, in addition to at least 15 other companies, would benefit from the move.

The UKIBC had long pursued the affair with the Ministry of Finance and had often said that tax disputes between UK conglomerates Cairn Energy and Vodafone Plc and the Indian government created uncertainty within the UK business community and needed to be resolved. to strengthen investment ties.

India and the UK are expected to begin negotiations soon on a bilateral FTA aimed at boosting trade and investment between the two countries and the tax law change would provide a solid basis for confidence, the industry body said. .

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