Tax Analysts (paywall) report this morning that:
According to a January 31 Press Trust of India report, Google argued in [an] affidavit that it does not provide taxable services in India, does not earn income in India, and does not have permanent establishment in India. It also said it does not receive royalty payments of any kind that are taxable under Indian law.
Google, let me remind you, carries considerable numbers of adverts placed by Indian companies and has a very specifically Indian website:
But we are back, of course, to Google relying on a logic of tax that defies all common sense and very obvious factual accuracy to claim that despite the very clear substance of it earning in India the legal form of the structure it has constructed says that the income in question arises elsewhere.
The OECD has already said that the Base Erosion and Profits Shifting project, - launched with much huff and puff by the likes of David Cameron last year to deal with such obvious egregious tax abuse as that of Google - cannot address this high tech abuse.
Does that mean wealth will continue to be stripped from india with impunity? My suggestion is it will not. India, and others will simply turn their backs on the international norms that are so obviously absurd and begin to create new ones. If they do I, for one, will welcome it. I hope India has to courage to begin this process, now.
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Its not just Google
Yahoo, http://www.stuff.co.nz/technology/digital-living/30015111/yahoo-shifts-tax-base-to-ireland-from-switzerland
Richard,
India will have to deal with a lot of backlash from other governments if it stands firm on issues like these. They made a mistake in the Vodafone issue, and now even genuine cases will be called in as “aggressive posturing”. No doubt there are absurd rules that corporates use to make such claims like Googles’, but India needs a lot more Governments on its side to ensure taking tough decisions.
Then it has to go to find them
There are plenty out there who would agree
for your info http://articles.economictimes.indiatimes.com/2013-06-23/news/40134751_1_microsoft-india-ibm-india-tax-demands/2
Thanks
I suggest you may wish to carefully read the recent decision in the Indian tax tribunal of eBay before you think India will change the tax world.
The courts (as was also seen in Vodafone) are still intent on applying the rule of law.