Page 43 - Quick Insights Book 2022

Chap. 8 – International Taxation

 Issuance of technical opinions on questions of law; Based on the provisions of BEPS, many countries have already
started amending their domestic tax laws to bring the same
 Representation before the revenue authorities including in line with BEPS. India has brought in amendments such as
appellate level and tax tribunal and allied assistance on introduction of equalization levy, secondary adjustment, concept
litigation management including strategic advisory; of significant economic presence, modification of the dependent
 Assistance in preparing books of accounts of the PE. agent definition, etc. which are in line with the BEPS provisions.

Reiterating India’s commitment to implement OECD’s BEPS
Action Plan 13, the Country- by-country re-porting (‘CbCR’) and
GENERAL ANTI AVOIDANCE RULE Master File (‘MF’) are required to be furnished to tax authorities
(GAAR) in terms of Section 286(8) and Section 92(D) of Income-tax Act.
The rules are 10DA and Rule 10DB of the Income-tax Rules,
1962 (the Rules).
General Anti Avoidance Rule (‘GAAR’) has been introduced by
the Government in order to target such arrangements which Some of the solutions which may be provided by Chartered
have been specifically entered with the object of avoiding taxes. Accountants in relation to BEPS &MLI, would include:
The provisions of GAAR were first introduced in the Act by the  BEPS Review – Undertake an entire review of the
Finance Act 2012, however, it finally came into effect from business model of the entity in light of the provisions
financial year 2017-18 onwards. of the two-pillar solution and the amended provisions
Some of the solutions which may be provided by Chartered as per the Act, which are in line with BEPS.
Accountants in relation to aspects of GAAR, include:  Modifications to existing business models – Based on
 GAAR evaluation – Evaluate a transaction/structure the aforesaid review, calculate ETR and top-up tax
from GAAR perspective in order to determine if there and suggest alterations or modifications to the existing
is any exposure of the said transaction/structure being business model in order to make it tax efficient and
considered as having entered into with the intention of compliant with BEPS provisions.
avoiding taxes in India.  Tax Advisory – Any other advisory work in relation to

 Issuance of technical opinions on questions of law; the impact of BEPS/MLI to the business of the entity.
 Representation before the revenue authorities including  Issuance of technical opinions on questions of law.
appellate level and tax tribunal in relation to the  Assistance in CBCR and Master File related compliances.
arrangements alleged to have been anti-avoidance
arrangements;  Other compliances similar to the one above, as may be
mandated from time to time under the Act.
BASE EROSION AND PROFIT
SHIFTING (BEPS) & FOREIGN TAX CREDIT
MULTILATERAL INSTRUMENT (MLI) Foreign tax credit is the credit claimed in the country of
residence for the taxes paid in any other country/source
Base erosion and profit shifting (BEPS) refers to tax avoidance country in case the income is taxable both, in the country of
strategies that exploit gaps and mismatches in tax rules source as well as the country of residence. The purpose of
to artificially shift profits to low or no-tax locations. As of 4 claim of foreign tax credit is to avoid double taxation of income.
November 2021, 137 countries and jurisdictions joined a new Accordingly, if an income is taxed in the source country then tax
two-pillar plan to reform international taxation rules and ensure credit should be available to avoid double taxation.
that multinational enterprises pay a fair share of tax wherever
they operate. That will swiftly implement a series of tax treaty Some of the solutions which may be provided by Chartered
measures to update international tax rules and lessen the Accountants in Foreign Tax Credit, include:
opportunity for tax avoidance by multinational enterprises. India  Eligibility of foreign tax credit – Verify various documents
is keeping eyes on GloBE rules framed in new two pillar plan and calculate the amount of credit for the foreign taxes
and might implement plans from 2023. The number of MLI available in India;
signatories as on 10th May 2022 date is 99 jurisdictions and
3 more jurisdictions have expressed their intent to sign the  Issuance of technical opinions on questions of law;
Convention.
 Filing of Form 67 – Assist the company in filing Form
67 in order to claim the foreign tax credit in India.

30 Quick Insights on Professional Opportunities for Chartered Accountants