International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
• Exemption from stamp duty on documents relating to offshore business
transactions.
• Exemption from stamp duty on documents relating to offshore business
transactions.
• Exemption from customs duty on imported office equipment.
• No withholding tax on interest payable on deposits raised from nonresidents
by offshore banks.
• Double taxation avoidance treaty with a number of countries.
• Expatriate staff is subject to a concessionary personal income tax rate.
• No estate duty or inheritance tax is payable on the inheritance of shares
in an offshore entity.
• No capital gains tax.
OFFSHORE FINANCIAL CENTERS AND IMPLICATIONS
FOR INDIA
A synthesis of the role and evolution of OFCs in select countries, their
operative mechanisms, regulatory framework and privileges delineated in
the preceding sections highlight various factors that contribute to the
attractiveness of OFCs, Certain common facilities/exemptions/concessions
have been worked out to form offshore banking in India.
With the Government having announced the policy of promoting
Special Econ9mic Zones (SEZs) which would, inter alia, serve to attract
world class investors, and at the same time contribute towards the country’s
export efforts, it is pertinent to take into account the factors highlighted
above that have contributed to successful OFCs around the world. This is
very important, as it is necessary to create a policy environment relating to
finance and banking which is conducive as also internationally competitive.
The main requirements of such a policy are given below.
• Conducive fiscal regime, such as minimal taxation or low tax jurisdiction
with an extensive web of bilateral tax treaties; no income tax, capital
gains or wealth taxes on individuals, stamp duty, customs duty, estate
tax, inheritance tax, etc.
• No withholding of income tax on non-resident depositors in OFCs.
• Stringent banking secrecy rules.
• Absence of exchange control or minimal control.
• Exemption from several prudential regulations including reserve
requirements limitations on investments, limitations on acquisitions of
immovable property, etc.
Only for Private Circulation