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Impact&nbspof amendments to the India-Mauritius tax treaty

Recently,&nbspthe Government of India and the Government of Mauritius signed a protocol for&nbspamending the Double Taxation Avoidance Agreement between the two nations (Mauritius tax treaty). A Press Release summarising the amendments to the tax&nbsptreaty was issued by the Central Board of Direct Taxes on 10 May 2016.

As per the&nbspPress Release the Mauritius tax treaty has been amended to provide source-based&nbsptaxation for capital gains.

As a fallout&nbspof the aforesaid amendment, the Double Taxation Avoidance Agreement executed&nbspbetween India and Singapore would also get impacted as the exclusive taxing&nbsprights granted to the resident state under the said convention are co-terminus&nbspwith the Mauritius tax treaty.

Girish&nbspVanvari, Head of Tax, KPMG in India along with our senior tax partners shall&nbspshare their perspective on the above amendments. 

 

KPMG in India’s Analysis of the recent foreign investment norms in the e-commerce sector

The Department of Industrial Policy&nbspand Promotion (DIPP), Government of India furnished guidelines on foreign&nbspinvestment in e-commerce vide a Press note No. 3 (2016 series) dated 29 March&nbsp2016. Key features of these guidelines which are expected to affect the&nbspe-commerce landscape are:

  • Providing explicit definitions of e-commerce, an e-commerce entity, inventory based model and marketplace model prevalent in e-commerce 
  • Defining the areas in which foreign investment is allowed 
  • Articulating the guidelines for marketplaces in which foreign investment can be brought in 

We at KPMG, frequently interact with regulators to seek&nbspclarifications on the changes brought out by the government. 

Saumil Shah, Partner&nbspand Head, Private Equity Tax and Amarjeet&nbspSingh, Partner, Tax shall be sharing their perspective on the above policy&nbspchange and also seek feedback from the attendees which shall be used to&nbspfacilitate the discussions with regulator in order to seek further&nbspclarifications.

 

Demystifying&nbspPOEM - the guiding principles of CBDT 

The Finance Act, 2015 amended the provisions of the Income-tax&nbspAct, 1961 to provide that a company will be treated as a tax resident in India,&nbspif it is an Indian company or its Place of Effective Management (POEM) is in&nbspIndia. POEM has been defined to mean a place where key management and&nbspcommercial decisions that are necessary for the conduct of the business of an&nbspentity as a whole are, in substance, made.

The Memorandum explaining the provisions of the Finance Bill, 2015&nbspstated that a set of guiding principles to be followed in the determination of&nbspPOEM would be issued for the benefit of taxpayers as well as the tax&nbspadministration. With a view to remove any ambiguity and provide objective&nbspcriteria for determination of POEM, the Central Board of Direct Taxes has now&nbspissued draft guiding principles for the determination of POEM of a company.&nbspMNCs would need to closely analyse these guidelines to determine whether any of&nbsptheir overseas entities could have POEM in India, thereby exposing them to the&nbspIndian tax net.

We, at KPMG in India, are glad to&nbsporganise a knowledge sharing webinar to discuss key aspects related to POEM and&nbspthe draft guidelines prescribed by the CBDT and the likely implications thereof&nbspon MNCs. The discussion will be led by senior tax professionals. This webinar&nbspis intended to provide a direction to enable you to prepare for the changes and&nbsptake proactive action, wherever required, to avoid overseas entities having&nbspPOEM in India.


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