DTAA black money bankruptcy code

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HARVEERSIR for GSSCORE

AGENDA (TO DISCUSS)Black MoneyIncome Declaration SchemeICIJ Mossack Fonseca BEPS (Base Erosion and Profit

Shifting)DTAA Revised with MauritiusBankruptcy Code

BLACK MONEY


# BLACK MONEY 1980 and 2007 ranges from 45% to

70% of GDP. (NIPFP) A December 2013 report by the Global

Financial Integrity (GFI), a non-profit research and advocacy organization, places India in 5th position on 'illicit financial outflows' category.

Rs.28 lakh crore (around $466 billion) was stashed away illegally in bank accounts overseas.

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Despite several official efforts to trace and recover black money India has not registered any major success.

The Panama papers bring out yet another list of India’s rich and influential who have parked money in tax havens,

finding credible ways to verify a new estimate showing that over $505 billion (approximately Rs. 33,83,500 crore) has left India during the 2004-13 period.

India’s Fight against Black Money

http://www.thehindu.com/news/national/centre-orders-probe-against-indians-linked-to-tax-havens/article8434112.ece

http://www.thehindu.com/news/national/centre-orders-probe-against-indians-linked-to-tax-havens/article8434112.ece

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All major databases on which action have been initiated have all come from foreign sources. Be it HSBC Geneva or Liechtenstein.

Justice M.B. Shah, chairman of the SIT on black money, pointed out that new restrictions are in place to control misuse of export-import facilities.

Strict implementation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015.

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HARVEERSIR for GSSCORE Voluntary disclosure The first such scheme was in 1951, which led to the

collection of Rs. 10.89 crore in taxes, and there have been eight more such schemes, until 2014.

In 1997, the Voluntary Disclosure of Income Scheme was the most successful of all of them, collecting Rs. 9,745 crore in taxes.

644 declarations only

The Modi government’s first major announcement was the setting up of the SIT on black money.

It followed it up with a three months compliance window between July and September 2015 under the black money Act.

It resulted in 644 declarations, totalling declaration of foreign assets worth Rs. 4,164 crore.

A total of Rs. 446 crore was collected as tax and penalty.

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IDS: EFFECTIVE 1ST JUNE TO SEPTEMBER 30TH

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HARVEERSIR for GSSCORE Offshore bank accounts and other financial dealings in

another country can be used to evade regulatory oversight or tax obligations. Often, companies or individuals use shell companies, initially incorporated without significant assets or operations, to disguise ownership or other information about the funds involved.

Panama, the Cayman Islands and Bermuda are among more than a dozen small, low-tax locations that specialise in handling business services and investments of non-resident companies.

Shell companies and other entities can be misused by terrorists and others involved in international and financial crimes to conceal sources of funds and ownership.

The ICIJ says the files from Mossack Fonseca include information on 214,488 offshore entities linked to 14,153 clients in 200 countries and territories.

How are offshore accounts used to evade tax obligations?

BASE EROSION AND PROFIT SHIFTING (BEPS)

By: Harveer [email protected]

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CONSIDER THISWith changing business models, globalisation, elimination of trade barriers, some of the international tax rules are not working anymore. Some companies are not paying tax anywhere.

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ALSO CONSIDER A Purely Domestic company v/s MNCs in terms of tax minimization opportunity.

Large multinationals were able to use mismatches in domestic tax laws and gaps in the international tax system to dramatically reduce their corporate taxes

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BEPS is an effort by OECD-G20 to modernise international taxation policies amongst developed and developing economies to reflect the changed and ever changing reality.

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MAGNITUDE.. Each country has a sovereign right to protect

and increase its Tax Base. Due to the significant evolution of the

economy that is Digital economy and so on, the tax policy lags behind and corporates exploits these loopholes. (Double Non Taxation)

corporate income tax has a big role in public finance of many developing countries.

The Loss of revenue is estimated to be around $100-240 Bn.

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IT CONTAINS.. BEPS project aims to fulfil G20-OECD's 15

points action plan on multifarious aspects of international tax policy.

It includes 13 reports mostly related to double taxation , double non-taxation, Transfer Pricing, Interest Deductions, information sharing, storage based digital taxes etc.

It also looks at the nexus approach that is linking tax benefits directly to R&D expenditure.

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BEPS aims to complete (in 2016) the work on a multilateral tax treaty instrument .

countries signing on the multilateral instrument may not need to renegotiate their respective bilateral treaties.

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THE FOCUSCompanies with global turnover in excess of ^750 million (approximately Rs 6,000 crore) have to report details of revenues, profits and taxes paid on a country-by-country basis to their respective tax administrators.

Around 900 companies across the globe would be impacted.

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FOR INDIABEPS recommendations pave the

way for a contemporary cross-border taxation policy

It ensures stricter sourced based taxation of profits linked to place where economic activity and value creation substantially occurs.

Rather than looking it as anti-business, it should be seen as upgradation of taxation system.

DTAA AMENDMENT WITH MAURITIUS

Harveer Singh

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36-year-old convention for avoidance of double taxation to curb revenue losses and money laundering.

more than half the foreign investments coming into this country had been routed through Singapore or Mauritius.

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RULES India the right to tax capital gains arising

from sale or transfer of shares of an Indian company acquired by a Mauritian tax resident,

It proposes to exempt investments made until March 31, 2017, from such taxation.

The government also said that shares acquired between April 1, 2017 and March 31, 2019 will attract capital gains tax at a 50% discount on the domestic tax rate — i.e., at 7.5% for listed equities and 20% for unlisted ones.

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The full tax impact of the protocol will fall on investments beginning April 1, 2019, when capital gains will attract tax at the full domestic rates of 15% and 40%.

Applicable only to those entities who invest a minimum of `27 lakh (or 1.5 million Mauritian rupees) in a year

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IMPACT Between April 2000 and December

2015, Mauritius accounted for $ 93.66 billion — or 33.7% — of the total foreign direct investment of $ 278 billion

Mauritius and Singapore less attractive to route investments to India, some of these transactions could now come through Netherlands which do not levy taxes on gains made through short-term transactions in financial securities.

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Capital gains on shares for Singapore can also now become source based due to direct linkage of Singapore DTAA Clause with Mauritius DTAA.

There are more than 90 Tax Havens across the Globe.

We, continue to allow P-Notes. (Total $30 Bn P-Notes investment in Indian Exchanges)

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WHY AMENDMENTThe Domestic Politics Pressure

BEPSICIJ: Mossack Fonseka GAAR

BANKRUPTCY CODE

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BACKGROUNDDoing Business Report,2016, India

is at 136 out of 189 countries.Secured Creditor in India recovers

25.7 % against 72.3 % of OECD Average.

Whole process takes 4.7 years in India (OECD 1.7 Years )

** compared to 0.8 years in Singapore and 1 year in London.

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BACKGROUND Kingfisher, once India's second-biggest

airline, was grounded in 2012 with debts of over $1.5 billion.

But it was not until February 2015that its long-suffering creditor banks got their hands on its former headquarters in Mumbai.

Nearly 60,000 bankruptcy cases languish in India's overburdened courts.

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ISSUES some laws forbid creditors from taking any legal

action against the defaulter until a restructuring plan is in place; that can take several years.

In the meantime, owners of sick companies retain day-to-day management control and often prolong court proceedings as nervy creditors watch the value of their assets dwindle

defaulters to start another business under their relative’s name by siphoning off business from the old one. Insolvency protection for debtors, too, is similarly flawed. Ailing companies have to wait until their net worth is reduced by half before they qualify as “sick”

Other Labor and Land laws conflict with the selling of Land or laying off workers.

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ISSUES To be declared sick, and qualify for court

protection, firms have to apply to the Board for Industrial and Financial Reconstruction, a government agency, which will not act until the firm has frittered away half of its net worth in losses.

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PROVISIONS OF THE ACT time-bound processes for insolvency resolution

of companies and individuals. (within 180 days).

The assets of the borrowers may be sold to repay creditors, if insolvency not resolved.

Would be conducted by licensed insolvency professionals (IPs). These IPs will be members of insolvency professional agencies (IPAs). IPAs will also furnish performance bonds equal to the assets of a company under insolvency resolution.

Information utilities (IUs) will be established to collect, collate and disseminate financial information to facilitate insolvency resolution.

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The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies.

The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.

The Insolvency and Bankruptcy Board of India will be set up to regulate functioning of IPs, IPAs and IUs.

The Board will consist of representatives of Reserve Bank of India, and the Ministries of Finance, Corporate Affairs and Law.

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HARVEERSIR for GSSCOREi) insolvency resolution costs,

including the remuneration to the insolvency professional,

ii) secured creditors, whose loans are backed by collateral, dues to workers, other employees,

iii) unsecured creditors, iv) dues to government, v) priority

shareholders and vi) equity shareholders.

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POSSIBLE IMPACTSBanks NPAs would be reduced.

Specially PSBs.Ease of Doing Business =>

Investment Improve investor confidence and

can deepen the corporate bond market.

New Start Ups => If Succeed- Party, If Fail => Bankruptcy

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One, when a loan default occurs, and either the borrower or the lender approaches the NCLT or DRT for initiating the resolution process.

Two, the creditors appoint an interim Insolvency Professional (IP) to take control of the debtor’s assets and company’s operations, collect financial information of the debtor from information utilities, and constitute the creditors’ committee.

Three, the committee has to then take decisions regarding insolvency resolution by a 75% majority.

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Four, once a resolution is passed, the committee has to decide on the restructuring process that could either be a revised repayment plan for the company, or liquidation of the assets of the company. If no decision is made during the resolution process, the debtor’s assets will be liquidated to repay the debt.

Five, the resolution plan will be sent to the tribunal for final approval, and implemented once approved

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THANK YOU

Date post:	12-Feb-2017
Category:	Economy & Finance
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DTAA black money bankruptcy code

Economy & Finance