President Barack Obama hailed India on Saturday as a vital source of US growth and jobs as his administration announced relaxation of US export controls to spur trade between the two countries. “As we look to India today, the United States sees an opportunity to sell our exports in one of the fastest growing markets in the world. For America this is a jobs strategy,” Obama said in New Delhi, India as he kicked off a 10-day tour of Asia.
Obama said India was still seen by many as “a land of call centres and back offices that cost American jobs”, but he rejected that view, Business Standard reports.
“It is a dynamic, two-way relationship that has created jobs and growth and higher living standards in both our countries and that is the truth,” he told business leaders. In an address to a business summit, President said US companies were finalising deals worth around $10 billion. Today’s deals will lead to more than 50,000 jobs in the United States,” he said.
Deals include previously announced transactions involving General Electric for aircraft engines and gas turbines, and Boeing for 737 passenger planes. But details on a key $4.5 billion sale by Boeing of C-17 military transport planes were still being ironed out.
Banks worldwide swing into action to comply with U.S. law enacted under the Hire Act in March 2010.
“Leumi, Israel’s biggest bank, is requiring U.S. clients to declare their deposits to the IRS, amid heightened scrutiny of offshore accounts by U.S. authorities. The bank is asking its clients to declare that they are not U.S. clients, or to reveal their accounts to U.S. authorities, according to a letter to clients obtained by Reuters. “We operate in every place and at all times in accordance with the legal and regulatory guidelines,” a bank spokesman said. The Leumi letter comes as authorities prepare to implement the Foreign Account Tax Compliance Act, putting pressure on foreign banks to be accountable for U.S. clients, with penalties if they do not.
Other foreign banks are sending clients similar warnings, according to private attorneys. “Most banks will have to do this sort of thing,” said Scott Michel, a lawyer for wealthy clients with cases before the IRS. Last week the U.S. Justice Department asked a judge to dismiss its criminal case against UBS AG, after the Swiss bank met the terms of deferred prosecution agreement reached last year over charges it helped tens of thousands of Americans hide assets abroad. UBS admitted it actively lured U.S. clients with the promise of tax secrecy, and paid $780 million to settle the criminal probe. The winding down of the UBS case has revived speculation over which banks U.S. authorities will target next. Clients of HSBC Holdings Plc, Europe’s biggest bank, received letters in June from the U.S. Justice Department notifying them that they are targets of a criminal probe. The IRS is still working through data on 15,000 accounts it received through its voluntary disclosure program, an amnesty-like program that ended last October.
“Leumi has a presence in the United States and thus is vulnerable to the full range of U.S. government enforcement efforts as used in the UBS case — criminal investigation, civil summons service and enforcement,” Michel said. Leumi’s U.S. headquarters is in New York, but it also has branches in Florida, California, and Illinois. The bank has $200 billion in total managed assets. IRS officials have said they are turning to Asia and Latin America, as funds flow out of Switzerland following the UBS probe. “No longer will a bank turn a blind eye to whether their customer is a U.S. taxpayer,” said Bryan Skarlatos, a lawyer for wealthy individuals whose firm has clients that have received the letter. Skarlatos said Leumi is sending disclosure forms to U.S. clients or those it believes could have some U.S. connection, and it is using disclosure as a condition for the clients staying at the bank. “It’s an extra level of due diligence. Some banks may say we don’t want U.S. customers,” he added.
Indian tax appeals authority has directed that the taxpayer should provide additional evidence to substantiate residence status based on the place of effective management of a Mauritius-based company to obtain the capital gains tax exemption under the India-Mauritius treaty (SMR Investments Ltd. v. DDIT); mere certificate of residence issued by Mauritius government is not enough to claim the treaty benefits. The ruling departs from the previous view of the government as well as the Supreme Court that the benefits under the Mauritius treaty are available to a Mauritius company if the company is in possession of a certificate of residence issued by the Mauritius government.
Proposed Direct Tax Code recently tabled for discussion in Indian parliament contains the general anti avoidance rules which would override treaty provisions in case of impermissible arrangements. Planning for investment in India via Mauritius? Think again….