india « Intellectual Property Tax

Posts Tagged: india

India: clear as …?

Just when you thought it couldn’t get more confusing … Following on from the post on the Microsoft case, I came across a Advance Ruling given to GeoQuest Systems BV (a Dutch company) by the Indian authorities in August.

Remember that the Delhi Tax Appeal Tribunal pretty much held that all software payments are royalties, and withholding tax needs to be deducted from payments, even if for shrink-wrap boxed software? Well, the GeoQuest Advance Ruling concludes that a payment for the licensing of special purpose software does not constitute a royalty – so no withholding tax on payments made from India.

The sound you hear is my head hitting the desk in confusion.

The Advance Ruling concludes that a payment for a software license does not fall within the parameters of a “royalty,” being a payment of any kind made for the use of, or the right to use, a copyright of a literary or scientific work.

Could the department dealing with Advance Rulings tell the Tax Appeal Tribunal that, please?

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India: royalties – oh no, they aren’t; oh yes, they are

In an early start to the pantomime season, the earlier sensible decision on shrink-wrap software of the Bangalore Tax Appeal Tribunal appears to have been thoroughly ignored by the Delhi Tax Appeal Tribunal, which has held that payments received by Microsoft from end users in India through distributors for sale of Microsoft off-the-shelf, shrink-wrap, software, are taxable as royalties (and so are subject to Indian withholding taxes). In effect, the decision means that any sale of software to India should have tax withheld from the payment, no matter what form the software actually takes – that’s going to make quite a difference to some profit margins.

Oh, and tax treaties with India can’t apparently be relied on, according to the court.

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international / transfer pricing — No Comments
27
Jul 10

India: Transfer pricing and trademarks

The Indian tax authorities aren’t having a great success rate on IP and tax at the moment: earlier this month the Delhi High Court set aside a claim by the Indian tax authorities to disallow (on transfer pricing grounds) a royalty paid by Suzuki India to its parent company, the Suzuki Motor Corporation in Japan. The royalty was paid for the use of the Suzuki ‘S’ logo on cars sold in India, and the tax authority took the view that in an arm’s length transaction between unconnected parties, no royalty would have been paid. This seems somewhat unlikely, and the High Court reached the same conclusion.

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case law / international — No Comments
27
Nov 09

India: satellite use fees are royalties

India, 16 October 2009: consideration paid by telecasting companies to satellite companies was for the use of a “process” and so was a royalty under Indian tax law even though the process was not “secret.”