Assignment international taxation
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Transcript of Assignment international taxation
INTERNATIONAL TAXATION
Presented By:
Aakanksha Gupta
Eesha Gupta
CONTENTS
• Meaning & Scope of International Taxation
• Types of International Taxation
• Taxability of Transaction
• Foreign Remittances
• Double Taxation & Relief Measures
• Tax Avoidance Methods
• Tax Treaty
• Budget 2015 Changes
MEANING OF INTERNATIONAL
TAXATION
The study or determination of tax on a person or
business subject to the tax laws of differentcountries or the international aspects of anindividual country's tax laws.
SCOPE OF INTERNATIONAL
TAXATION
• Taxation of Residents on foreign income
• Taxation of Non Residents
• Cross border taxation of MNCs
TYPES OF INTERNATIONAL
TAXATION
• Residence based taxation :Residents of thecountry are taxed on their worldwide (local andforeign) income.
• Source Based Taxation :Only local income froma source inside the country is taxed. Usuallynonresidents are taxed only on their local income
TAXABILITY OF TRANSACTION
• Scope of Total income is defined in Section 5 ofIncome Tax Act, 1961
• Two step process:
• Identify whether it is Indian Income or ForeignIncome
• Determine taxability of both the incomes byidentifying the control of business
IDENTIFICATION OF INDIAN
INCOME AND FOREIGN INCOME
IDENTIFICATION OF TAXABILITY
FOREIGN REMITTANCES
• Section 195 of Income Tax Act, 1961
• TDS on Non Resident Payments
• Withholding Taxes
• Royalty and Fees for Technical Services
DOUBLE TAXATION
Double taxation occurs when tax is paid more than onceon the same taxable income or asset.
Types of double taxation:
• Juridical
when the same person is taxed twice on the same income
by more than one state
• Economic
when more than one person is taxed on the same item
RELIEF FROM DOUBLE
TAXATION
• Exemption
• Deduction
• Credit
Bilateral relief Unilateral relief
TAX AVOIDANCE METHODS
• Profit shifting via transfer pricing
Arm’s length pricing
Limitation On Benefits: LOB
• Thin capitalization
TAX TREATY
A tax treaty is an agreement between two countriesthat outlines a series of articles which clarifies the taxrules between the countries on specific subjects.
Types:
• OECD model tax treaty
• UN model tax treaty
DIFFERENCE BETWEEN THE
MODELS
OECD MODEL TAX TREATY
• Residence based taxation
• Capital export neutrality
• Signed between countries with comparable tax systems
• Credit Method
UN MODEL TAX TREATY
• Source based taxation
• Capital import neutrality
• Signed between countries with unequal economic status
• Exemption method
BUDGET 2015: CHANGES IN
INTERNATIONAL TAXATION
• GAAR is deferred by two years and will apply witheffect from 1st April 2018, i.e. AY 2018-19 and FY2017-18
• Residence status of company is re-defined
• Place of Effective Management(POEM) test fordetermination of residence
• Reduced Tax on Royalty and Fees for Technical Services(FTS) paid to Non Residents from 25% to 10%
• CBDT is now empowered to frame rules to notify themanner of granting foreign tax credit
• Reporting by Persons paying any sums to Non Residents
• Measures to curb Black Money stashed abroad
REFERENCES
• http://www.incometaxindia.gov.in/pages/international-taxation.aspx
• http://indialiaison.com/residential_status.htm
• http://www.expatarrivals.com/india/taxes-in-india
• http://taxguru.in/income-tax/faq-tds-residents-us195-income-tax-act.html
THANKS