Public RelationsForeign cos seeking FIPB nod to share more details
Foreign entities seeking investment clearance in India may now be asked to furnish details including their shareholding structure, address of the parent and source of funds, in view of recent taxation issues.
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The apex direct tax body Central Board of Direct Taxes (CBDT) is pressing Foreign Investment Promotion Board (FIPB) to include additional information from the taxation angle at the time of examining the applications.
The information sought by the CBDT to be added in the FIPB application list to be examined were--names and addresses of the specific company/companies who are going to make an investment, details of the ultimate parent company of the investor and a diagrammatical representation of the corporate structure depicting the relationship between the parent company and the investee company including names and adresses of shareholders, directors of all the companies.
However, in a recent letter to the FIPB, the CBDT has said, "The changes suggested by DoR (Department of Revenue) to the check list have not been made so far. You are requested to take up the matter on priority and effect the changes to the check list at the earliest."
There have been tax disputes between the tax department and companies over investments here. Some of them are Vodafone-Essar and Tata-AT&T among others.
The tax department is also finding it difficult to get the details from foreign companies as "the investees are reluctant to give any details i.e. balance sheets, P&L account of the foreign investors citing they have approval of FIPB and RBI...."
CBDT in a letter earlier had also sought the details of source of funds to be invested. This included the name and address of the persons providing the funds and a diagrammatical representation of the flow of funds from the original investor to the investee company, to be included in the list to be examined in the FIPB application by the company.
Non-availability of details, leads to a number of litigations as the tax official makes certain additions to the tax payable in India.
"In order to avoid such disputes, it is further requested that the check lists should specifically mention that the applicants shall furnish 3 years audited financial statements of the actual investor and the immediate investor as per the application, in support of the sources of funds and the capacity of the investor to invest," the CBDT added.