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    Improving Taxation Environment: Attracting Foreign Direct Investment

    Singh, R. R. | June 2016
    Abstract
    With opening of the economy in 1991 and subsequent removal of regulatory and trade barriers, India became an attractive investment (Foreign Direct Investment-FDI) destination. A large number of multinationals have established operations in India to utilise the services of available skilled manpower. Indian tax administration was always perceived to be difficult. The economic liberalisation had created challenges in integrating Indian tax system with the world economy during the adjustment phase. World financial environment had remained depressed since 2008. The actions of the government in the area of taxation laws during 2012 and 2013 with sudden introduction of General Anti –Avoidance Rules (GAAR) including retrospective amendment to law further aggravated the taxation environment specially in the area of international taxation. This badly affected the sentiments of the international investor community. In other words it can be said that the economic liberalization did not match with the tax aggressiveness and that probably led to some major concerns, and impacted ease of doing business. Though the government did take some steps during 2012 and 2013 and further more steps during 2014 and 2015 to soothe the investor sentiment, there are still areas of persisting concern which need to be addressed. Section one, introduction, broadly deals with the concerns of the multinationals in the area of taxation environment. Section two deals with the genesis of the recent crisis in this area and issues involved such as introduction of GAAR, international taxation, retrospective amendment dispute resolution etc. Section three deals with GAAR. Section four deals with various issues involved in the area of international taxation including Permanent Establishment, attribution of profits, transfer pricing, taxation of Information Technology (IT) and Information Technology enabled Services (ITeS) sectors, Advance Pricing Agreements (APAs) and Safe Harbour Rules. While Section five deals with retrospective amendments to the Income Tax Act and Section six deals with various aspects of dispute resolution, section seven deals with attitude of the tax administration. Section eight deals with the recent steps taken to address the taxation issues and section nine contains the conclusions and the areas that still needs to be addressed.
    Citation
    Singh, R. R.. 2016. Improving Taxation Environment: Attracting Foreign Direct Investment. © Indian Council for Research on International Economic Relations. http://hdl.handle.net/11540/9100.
    Keywords
    Urban Development Finance
    Trade Finance
    Small Business Finance
    Rural Finance
    Roundtable on International Trade and Finance
    Regional Development Finance
    Public Service Finance
    Public Finance
    Project Finance
    Private Finance
    Non Bank Financing
    Non-Bank Financial Institutions
    Municipal Finance
    Local Government Finance
    Local Currency Financing
    Limited Resource Financing
    International Financial Institutions
    Infrastructure Financing
    Industrial Finance
    Government Financial Institutions
    Government Finance
    Financing of Infrastructure
    Financial Sector Development
    Financial Regulation
    Economic evaluation
    Economic Forecast
    Resources evaluation
    Input output analysis
    Cost benefit analysis
    Foreign and Domestic Financing
    Cybersecurity
    Taxation
    Public Accounting
    National Budget
    Municipal Bonds
    Local Government
    Local Taxes
    International Monetary Relations
    International Financial Market
    International Banking
    Central Banks
    Business Financing
    Capital Resources
    Budgetary Policy
    Capital Needs
    Corporate Divestiture
    Capital Instruments
    Pension Funds
    Insurance Companies
    Banks
    Digital
    Portfolio Management
    Fiscal Administration
    Economics of Education
    Development Banks
    Scaling-Up And Evaluation
    Results-Based Monitoring And Evaluation
    Public Policy Evaluation
    Impact Evaluation
    Performance Evaluation
    Use tax
    Taxing power
    State of taxation
    Tax-sales
    Tax revenue estimating
    Tax planning
    Spendings tax
    Special assessments
    Tax administration and procedure
    Sales tax
    Real property and taxation
    Progressive taxation
    Effect of taxation on land use
    Effect of taxation on labor supply
    Intergovernmental tax relations
    Inheritance and transfer tax
    Energy tax
    Risk assessment
    Economic policy
    Economic forecasting
    Cost effectiveness
    Participatory monitoring and evaluation
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    Citable URI
    http://hdl.handle.net/11540/9100
    Metadata
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    Working_Paper_325.pdf (603.4Kb)
    Author
    Singh, R. R.
    Theme
    Finance
    Evaluation
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise