Taxing Offshore Indirect Transfers in India
June 16, 2022

 

The infamous indirect transfer provisions were introduced under the Indian tax law as a knee jerk reaction to the Supreme Court’s decision in case of Vodafone International Holdings with retroactive effect from April 1, 1962. The indirect transfer provisions have been a source of protracted litigation and tax uncertainty for foreign investors. Pursuant to the introduction of indirect transfer provisions, tax demands were raised in 17 cases, few of which also spurred investment treaty arbitration cases against India.

Our research paper on “Taxing Offshore Indirect Transfers in India” is a comprehensive summary of the indirect transfer provisions including the history of its introductions, the amendments made to Indian tax law to provide exemptions and clarifications, compliance and reporting requirements etc. While the retroactivity of the indirect transfer provisions was removed in 2021, not all dust has been settled and there exist quite a few issues with respect applicability of these provisions.

In this paper, we have discussed the several issues concerning indirect transfers such as availability of tax treaty exemption, issues for institutional investors, M&A exemptions, interplay with GAAR and impact of these provisions in negotiation of tax indemnities. Further, we have also discussed the approach adopted by OECD, UN and other jurisdictions such as China, Peru etc. for taxing the indirect transfers and issues in resolving tax disputes through investment arbitration.

Given that most of the foreign investments in India have been generally made through foreign intermediate entities, assessing the impact of indirect transfer provisions on transactions involving such entities becomes essential. We hope this paper will be useful in providing detailed insight into these provisions.

Please click here to access our paper.

Please do not hesitate to contact us if you have any queries.

For any help or assistance, please email us on ndaconnect@nishithdesai.com.

Do visit us at www.nishithdesai.com.

 


Disclaimer

The contents of this hotline should not be construed as legal opinion. View detailed disclaimer.

This Hotline provides general information existing at the time of preparation. The Hotline is intended as a news update and Nishith Desai Associates neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this Hotline. It is recommended that professional advice be taken based on the specific facts and circumstances. This Hotline does not substitute the need to refer to the original pronouncements.

This is not a Spam mail. You have received this mail because you have either requested for it or someone must have suggested your name. Since India has no anti-spamming law, we refer to the US directive, which states that a mail cannot be considered Spam if it contains the sender's contact information, which this mail does. In case this mail doesn't concern you, please unsubscribe from mailing list.


Taxing Offshore Indirect Transfers in India

June 16, 2022

 

 

The infamous indirect transfer provisions were introduced under the Indian tax law as a knee jerk reaction to the Supreme Court’s decision in case of Vodafone International Holdings with retroactive effect from April 1, 1962. The indirect transfer provisions have been a source of protracted litigation and tax uncertainty for foreign investors. Pursuant to the introduction of indirect transfer provisions, tax demands were raised in 17 cases, few of which also spurred investment treaty arbitration cases against India.

Our research paper on “Taxing Offshore Indirect Transfers in India” is a comprehensive summary of the indirect transfer provisions including the history of its introductions, the amendments made to Indian tax law to provide exemptions and clarifications, compliance and reporting requirements etc. While the retroactivity of the indirect transfer provisions was removed in 2021, not all dust has been settled and there exist quite a few issues with respect applicability of these provisions.

In this paper, we have discussed the several issues concerning indirect transfers such as availability of tax treaty exemption, issues for institutional investors, M&A exemptions, interplay with GAAR and impact of these provisions in negotiation of tax indemnities. Further, we have also discussed the approach adopted by OECD, UN and other jurisdictions such as China, Peru etc. for taxing the indirect transfers and issues in resolving tax disputes through investment arbitration.

Given that most of the foreign investments in India have been generally made through foreign intermediate entities, assessing the impact of indirect transfer provisions on transactions involving such entities becomes essential. We hope this paper will be useful in providing detailed insight into these provisions.

Please click here to access our paper.

Please do not hesitate to contact us if you have any queries.

For any help or assistance, please email us on ndaconnect@nishithdesai.com.

Do visit us at www.nishithdesai.com.

 


Chambers and Partners Asia-Pacific: Band 1 for Employment, Lifesciences, Tax and TMT, 2022

AsiaLaw Asia-Pacific Guide 2022: Ranked ‘Outstanding’ for Media & Entertainment, Technology & Communications, Labor & Employment, Regulatory, Private Equity, Tax

Who's Who Legal: Thought Leaders India 2022: Nishith M Desai (Corporate Tax - Advisory, Corporate Tax - Controversy and Private Funds – Formation), Vikram Shroff (Labour & Employment and Pensions & Benefits) and Vyapak Desai (Arbitration)

Benchmark Litigation Asia-Pacific: Tier 1 for Tax, Labour and Employment, International Arbitration, Government and Regulatory, 2021

Legal500 Asia-Pacific: Tier 1 for Tax, Data Protection, Labour and Employment, Private Equity and Investment Funds, 2021

IFLR1000: Tier 1 for Private Equity and Tier 2 for Project Development: Telecommunications Networks, 2021

FT Innovative Lawyers Asia Pacific 2019 Awards: NDA ranked 2nd in the Most Innovative Law Firm category (Asia-Pacific Headquartered)

RSG-Financial Times: India’s Most Innovative Law Firm 2019, 2017, 2016, 2015, 2014


Disclaimer

The contents of this hotline should not be construed as legal opinion. View detailed disclaimer.

This Hotline provides general information existing at the time of preparation. The Hotline is intended as a news update and Nishith Desai Associates neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this Hotline. It is recommended that professional advice be taken based on the specific facts and circumstances. This Hotline does not substitute the need to refer to the original pronouncements.

This is not a Spam mail. You have received this mail because you have either requested for it or someone must have suggested your name. Since India has no anti-spamming law, we refer to the US directive, which states that a mail cannot be considered Spam if it contains the sender's contact information, which this mail does. In case this mail doesn't concern you, please unsubscribe from mailing list.

 
 

 

Want to work with us?

We aspire to build the next generation of socially-conscious lawyers who strive to make the world a better place.

At NDA, there is always room for the right people! A platform for self-driven intrapreneurs solving complex problems through research, academics, thought leadership and innovation, we are a community of non-hierarchical, non-siloed professionals doing extraordinary work for the world’s best clients.

We welcome the industry’s best talent - inspired, competent, proactive and research minded- with credentials in Corporate Law (in particular M&A/PE Fund Formation), International Tax , TMT and cross-border dispute resolution.

Write to happiness@nishithdesai.com

To learn more about us Click here.

Research Papers

 

NDA Connect

Connect with us at events, 
conferences and seminars.

 
 

Mobile App

 

Click here for

Apple IOS

Android

   
 

Proud Moments

Chambers and Partners Asia-Pacific: Band 1 for Employment, Lifesciences, Tax and TMT, 2022

AsiaLaw Asia-Pacific Guide 2022: Ranked ‘Outstanding’ for Media & Entertainment, Technology & Communications, Labor & Employment, Regulatory, Private Equity, Tax

Who's Who Legal: Thought Leaders India 2022: Nishith M Desai (Corporate Tax - Advisory, Corporate Tax - Controversy and Private Funds – Formation), Vikram Shroff (Labour & Employment and Pensions & Benefits) and Vyapak Desai (Arbitration)

Benchmark Litigation Asia-Pacific: Tier 1 for Tax, Labour and Employment, International Arbitration, Government and Regulatory, 2021

Legal500 Asia-Pacific: Tier 1 for Tax, Data Protection, Labour and Employment, Private Equity and Investment Funds, 2021

IFLR1000: Tier 1 for Private Equity and Tier 2 for Project Development: Telecommunications Networks, 2021

FT Innovative Lawyers Asia Pacific 2019 Awards: NDA ranked 2nd in the Most Innovative Law Firm category (Asia-Pacific Headquartered)

RSG-Financial Times: India’s Most Innovative Law Firm 2019, 2017, 2016, 2015, 2014

 

NishithTV