FIIs In India Express Concerns Over Direct Tax Code

by Lorys Charalambous, Tax-News.com, Cyprus

25 August 2009

Foreign institutional investors (FIIs) in India have sought clarification from the government with regard to the newly unveiled draft Direct Tax Code, over fears that some of the tax benefits previously enjoyed by such entities may be stripped away, it has emerged.

According to reports in the national media, concerns were raised with Finance Minister Pranab Mukherjee at a meeting hosted by the National Stock Exchange, with FIIs arguing that changes to the rules relating to tax treaties and the alignment of the tax treatment of foreign and domestic businesses will increase their tax liability substantially.

The need for stability and consistency with regard to the rules for foreign investors was also flagged up as a key issue for FIIs.

Mr Mukherjee reportedly sought to reassure the representatives of the FIIs who attended the meeting that the direct tax code as it currently stands is a discussion document, and that their input will be welcomed by the Indian authorities.

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