New Delhi The US on Friday raised concerns over Indias proposal to bring foreign companies under retroactive tax liabilities and adoption of manufacturing policies alt39 discriminatoryalt39 to international firms, contending that such poli
cy decisions alt39 dampenalt39 investor sentiment.
” The adoption of manufacturing policies discriminatory to foreign companies and the inclusion of retroactive tax provisions in the Finance Bill are two examples ( of policy concerns),” Powell said.
However, assuaging concerns of foreign investors on proposed amendments to tax laws retrospectively, Finance Minister Pranab Mukherjee said that the changes are alt39 clarificatoryalt39 in nature and will not have any impact on foreign investments.
Mukherjee further said that proposed amendments would not override the provisions of the Double Taxation Avoidance Agreements ( DTAA) with 82 countries.
Proposed amendments alt39 just clarifyalt39 what is already there in law to remove ambiguity and provide certainty.
The new American Ambassador to India, Nancy Powell, flagged off these concerns at what was her first public address in India after she presented her credentials to President Pratibha Patil on Tuesday.
Speaking at the American Chamber of Commerces 20th Annual General Meeting, the ambassador said she believed the business of the US Mission in India was alt39 businessalt39 and improving bilateral trade relationship and hence she was alt39 naturally concernedalt39 by certain ongoing challenges to trade and investment.
Among the policy decisions that she said cause ” significant concern” and ” dampen sentiment” about Indias investment climate, were retroactive tax provisions in the Finance Bill, that has led to a retrospective tax claim of more than USD 2 billion on British telecom company Vodafone from a 2007 deal.
FM Pranab Mukherjee clears air, says retrospective amendments to tax laws will not have any impact on foreign investments
