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Margarita (Legal Counsel)     07 March 2013

Income tax and foreign economic deals

 

Dear Lawyers,

I would be very grateful, if you  help me to answer on followinq question:

e.g., There is natural person (resident of Russia, citizen of Russia). He is  founder of two companies in Russia (call them "A" and "B"). The amount of shares in capital of company "A" is 27 percents of shares, and the amount of shares in capital of company "B" is 100 percents of shares. In addition, this natural person founded indian company (call it "С"), in capital of which he has 90 percents of shares. All of this companies are purchaser of spare parts for cars. And some times "С" makes contracts (foreign economic deals) with "A" and "B". Of course, when "A" and "B" sell spare parts to Russian customers, they should pay income tax (because they will have some profit)  to Russian budget. 

Should "С" pay income tax to Indian budget on profits of "A" (or/and "B"), which will be gained from contracts between "A" (or "B") and its customers?



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 2 Replies

advharshavardhan (Executive)     07 March 2013

Yes . C will have to pay Tax on profit earned from business.

Margarita (Legal Counsel)     08 March 2013

Thank You for Your answer. There is bilaterial treaty between the Republic of India and the Russian Federation. And I thought, that if our company ("C") pay income tax on its profit from contracts with "A" and "B" in India, and  if  "A" and "B" pay income tax on their profits in Russia, then "C" should not pay income tax on profit of "A" and "B". If not, than there is case of double taxation, isn't it?


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