15% global corporate tax pact: The India impact

Written by: Our Bureau

(Our Bureau, June 7) The world’s richest nations are backing a proposal to cap global corporate tax at 15%. If New Delhi were to agree to the G7’s proposal, India’s attractiveness as an investment destination will rise manifold, experts say. That’s because effective tax rates in India vary between 17% and 25%. The G7 pact attempts to plug cross-border tax loopholes used by some companies that incorporate themselves in zero-tax destinations such as Jersey and Cayman Islands and low-tax destinations such as Ireland and Cyprus (both 12.5%). It will also require companies to pay taxes in the countries they operate from. This, the G7 hope, will provide a “level playing field and a crackdown on tax avoidance,” according to a report in Hindustan Times. Experts told Business Today that the minimum tax rate will also bring an end to digital taxes akin to the equalization levy in India and pave the way for changes in global tax treaties.

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