Key Services Provided by us

• Advice and assist on entity structuring, capital structuring and regulatory approval process in the selected jurisdiction
• Advice on cross-border investment strategies including suggestions for obtaining optimal ownership structures for investing into a particular jurisdiction which includes setting up an international holding company, global sales company etc.
• Assist in finalizing and review of the shareholders, joint venture and other business agreements or arrangements from tax perspective
• Identify and enhance tax and fiscal benefits including obtaining tax rulings in the selected jurisdiction
• Advice on tax credit claim in India and also Tax treaty implication
• Assist in obtaining approvals from Reserve Bank of India and also from the regulatory authorities.

What is Inbound Investment Structuring?

Choice of Entity

Particulars	Private Company	LLP
Income Tax	Corporate Tax Rate: 32.45%/33.99% MAT, DDT, and BBT are applicable	Corporate Tax Rate: 33.99% Tax efficient as no MAT, DDT and BBT are applicable
Foreign Direct Investment/Foreign Exchange Management Regulation	No FIPB approvals required for FDI at the time of entry or exit FDI can be made in the form of cash consideration, swap, conversion of receivables etc	Prior approval from FIPB authorities required even if the activities are covered under automatic route FDI can be made only by way of cash contribution
Governance Framework	Higher Statutory Requirements Adhere to CSR policy	Limited Reporting Requirements Not required to comply with CSR Policy

Use of Holding Companies

Direct Investments in India

Foreign Investor > Indian Company Key Issues

• Capital gains on sale of shares are taxable in India
• Treaty Benefit in respect of capital gains is available only in selected countries
• Risk of double taxation due to conflicting source rules

For foreign companies investing in India, Mauritius has become like a Hub. Especially for portfolio investors who earn from portfolio investments in India in the form of capital gains, it is unavoidable to set up a holding company in Mauritius. Most of the countries do not levy a capital gain tax on non-residents investing in shares in their countries. However, if a foreign company holds shares in Indian Company it will end up paying 21% tax on long-term capital gain and 42% tax on the short-term capital gain. In most of the countries, the supreme rate is below 35%. Therefore, in case of short-term gains, the foreign company will not get the full credit for the taxes paid in India. Further, in case of FIIs and venture capital funds, most of the investors are pension plans, which are otherwise tax-exempt entities in their home countries. Therefore, they do not have taxable income to offset the tax paid in India. This is the reason many inbound investments have flown into India via Mauritius. A substantial amount of foreign direct investment has gone into IT and ITES industries. Most of the companies set up for IT services and BPOs enjoy a tax holiday under section 10A/10B. It is very common for the founders to start the business with minimum paid-up capital, to take the companies to a reasonable maturity stage and invite private equity investors to invest in these companies. By virtue of provisions like S. 10A(9), often these companies lose the tax holiday at the time new investors join in. This is derogatory to the main objective of providing the tax incentive to these units set up in STPs for development of software industry and encouraging their expansions. Often, provisions like this compel foreign investors to induct holding companies so that they are neutral to changes in foreign law or internal restructuring.