The international tax landscape is undergoing very many significant changes and developments across the world. Different countries across the world have seen the importance of cooperation while addressing base erosion and profit shifting (BEPS) matters globally. Countries implement changes by their domestic laws or tax treaty networks that they are a party to, hence major developments are realized. India is part of the BEPS implementation process. India has been able to come up with different solutions regarding tax challenges. This paper addresses the changes in India and how Amazon, as an internationally expanding company can navigate this business environment.
Corporate Tax System
Different countries have different tax system. The difference in tax system has made it complex when carrying out tax planning for multinational operations. However, tax planning for multinational operations is an important aspect of international business. Corporate tax is a form of tax levied on profits earned by businessmen after a specific period (Pekkanen, 2014). Corporate tax in India is levied on both domestic and companies outside the country. This is one of the many factors that different companies outside India will have to consider if they choose to expand their businesses into India, including Amazon. It is a rule in India that all individuals and citizens earning income to pay a fee on their income (Pekkanen, 2014). Business offices are included in the taxes that are supposed to be paid by those who are earning. This charge is known as corporate tax or company tax. A company can either be domestic or foreign, and the income earned in one financial year since corporate or business tax rates are different in all companies. Currently, India has reduced their cooperate tax so as to attract foreign direct investment. Through this India’s economy has greatly improved (Poirson, 2006).
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Any enterprise that is within India and it is of Indian origin is known as domestic company. M ost countries across the world have been rushing towards globalization and integration. Three decades ago India had not joined the race into globalization and integration, which led to its economic scenario worsening its development. In order to improve its economy India’s government decided to increase its exports to tie over the ever-increasing imports. Since then India developed a common goal of gaining a considerable proportion of international business in order to be internationally known. This was a way of attracting investors. India’s government formulated export promotion laws to govern the process of exports and imports. Foreign companies like Amazon can take advantage of these laws to work out a deal that will be mutually beneficially for the company and India.
Export and Import Policies
India is a member of the World Trade Organization (WTO). If any country joins World Trade Organization it is said to be part of the global village. New trade blocks and new world order have emerged. Regional trading arrangements (RTAs) had filled India's import and export system. Regional trading is governed by the Foreign Trade (Development & Regulation) Act of 1992 and India's Export-Import (EXIM) Policy. Imported and exported goods are taxed. This rule is an exemption to those items regulated by the EXIM policy as they are all free. Registration with regional licensing authority is a requirement for any person who wishes to import or export any products. The customs do not allow clearance of goods unless an Import Export Code (IEC) has been obtained from the regional authority by the importer. India is currently signing bilateral agreements with various countries around the world (Carbaugh, 2015).
India’s’ customs tariff and fees system structure is characterized by a lack of transparency in determining net effective rates of customs tariffs, excise duties, and other duties and charges. The additional duty is not applied on wine, spirits, and other alcoholic beverages. Additional duties is a four percent ad valorem tax that applies to all imports, including alcoholic beverages, except those imports exempted from the obligation under an official customs notification.
The Duty Exemption Plan allows duty-free import of inputs required for export production. An advance license is issued to those who apply for duty exemption plan. Under the Duty Remission Plan, export replenishment remission of duty on inputs used in the export product have been permitted. DFRC is a form of Duty Remission Plan. DFRC permits duty-free import charges on data used in the export goods. DFRCs permits duty-free import charges on data used in the export good. India’s government has the jurisdiction to declare a full or partial duty exemption "in the public interest”. Half of India's total inputs are entered under concessional tariffs. India uses waivers and it is conducted by the tariff-reduction program (Nayak & Sahu, 2017).
In conclusion, India uses a corporate tax system and import and export policies to regulate capital transactions that are conducted under corporate veils for both foreign and domestic entities. These policies were created with the intent of creating and growing new business relationships with the domestic companies and other international companies looking to expand its business into India. Such relationships will promote the growth of different companies as an international enterprise while increasing India’s ability to strengthen its economy and become a global influence, which it already is (Poirson, 2006).
References
Bajpai, A. D. (1995). Emerging trends in Indian economy: papers in honour of Prof. Daya Shankar Nag. . New Delhi: Atlantic. .
Bajpai, A. D. (1995). Emerging trends in Indian economy: papers in honour of Prof. Daya Shankar Nag. New Delhi: Atlantic.
Carbaugh, R. J. (2015). International economics. Mason, OH: South-Western Cengage Learning.
Gilmartin, D. (2009). Empire, Identity, and India: Peasants, Political Economy and Law. Chicago: The Historian.
Nayak, S. S., & Sahu, A. K. (2017). INDIA’S TAX SYSTEM: INCREASING PROGRESSIVELY. International Education and Research Journal, 3(6) .
Pekkanen, S. M. (2014). Oxford handbook of the international relations of Asia. Oxford: Oxford University Press.
Poirson, H. (2006). Theœ tax system in India could reform spur growth? Washington, D.C: International Monetary Fund, Asia and Pacific Dept.
