June 6, 2004 |
By
Keith Martin in Washington, DC
INDIA cannot tax foreign companies doing business in the country at a higher rate than it taxes local companies, a tax tribunal ruled.
India taxes domestic companies at a 35% rate. Foreign companies are taxed at 40%. The decision by the tax tribunal only affects foreign companies that are in a position to benefit from tax treaties between their home countries and India that bar
discriminatory tax treatment. Such treaties usually require the foreign company to do business through an office or other “permanent establishment” in India.
The company whose case was heard by the tax tribunal was based in the United Kingdom. The decision was reported in late April in the Economic Times.
