Today a judge-led inquiry by Britain’s National Audit Office, which focussed on recent tax settlements with companies including Vodafone, was in the news.
Large corporations that do not pay taxes on the same level as members of the public, deprive the exchequers of both India and UK . There is public anger at these losses; UK settlements are alleged to have left billions of pounds of liabilities uncollected. On a trip to New Delhi – despite this – George Osborne, the blinkered UK chancellor, criticised the Indian government for its proposed changes, warning of potentially harmful effects on trade and investment.
Earlier this year James Politi in Washington and James Crabtree in Mumbai reported that US business groups, mainly from the technology and financial services sectors, sent a letter to Timothy Geithner, the American treasury secretary. They pressed him to attempt to stop India from enacting a taxation measure which would retroactively tax business deals in which a non-resident transferred shares into a non-Indian company that derives its value “substantially” from Indian assets:
“We believe that the implementation of these provisions will have immediate and severe consequences for companies, affecting their willingness to commence or continue their operations in India.”
The ‘brazen’ US business lobby addressed:
Dr Allison Christians, Associate Professor of Tax Law at the University of Wisconsin, puts these issues in plain language:
‘These people do not want to “raise concerns”. They want to stop India’s democratically elected government from enacting legislation in accordance with its sovereign status as an independent nation. It is amazing and preposterous that they expect the US government to help them do that.
‘If US businesses really do not like what India is doing they have a viable option to do what they say they are going to do, take their assets and go home. But they do not want to do that. They want to be able to continue doing business in India at the lowest possible cost to them.
‘If the Indian government will not give them the tax system they want, these business leaders would prefer a government-to-government conflict instead of India opening itself to businesses willing to work within its sovereign territory according to its own rules.
‘Anyone is free to disagree with India’s tax policy direction and anyone is free to express “concerns” about it. But India’s tax policy decisions belong to India’s people and it is shameful to see the US business lobby so brazenly insisting on their right to intervene.’
Timothy Geithner is to visit India this month for talks.