This corporate structure in India would offer Tesla tax benefits related to capital gains and dividend payments, say experts.
Also, Tesla’s choice is an exception to the general trend in the auto industry. MG Motors that entered India in 2017 invested via China, which is also the home jurisdiction for its parent company SAIC Motors. Similarly, India investments of KIA Motors came from South Korea, which is also the corporate home of KIA Corp. A mailed query sent to Tesla remained unanswered.
Tesla is registered in California, and Tesla Motors, the Netherlands, is its subsidiary. Tax experts said the Netherlands has been one of the top choices for US-based companies since it offers favourable tax rates, and has a strong intellectual property (IP) protection framework.
“With the amendment of India’s tax treaties with Mauritius and Singapore, there are hardly any choices for getting capital gains tax exemption on FDI transactions,” said Rajesh Gandhi, partner, Deloitte India. “The India-Netherlands treaty stands out because it exempts capital gains from tax where India shares are sold by the Dutch company to a non-Indian buyer.”
Even the rates for dividend taxes and withholding taxes are lower if an investor chooses to come via the Netherlands, say tax experts.
Experts say that choosing tax havens to route investments is no longer that simple as countries globally have been coming up with anti-avoidance laws.
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28 Comments on this Story
ACS CHANDAN SETH18 days ago
there must Not be any concession on Tax.
Dm Bhanap44 days ago
The route Tesla may follow to enter India for setting up a unit or doing investment is their choice. We Cannot afford to miss the opportunity to bring Tesla to India because it will trigger export-oriented FDI to India in near future. I had recently suggested in these columns that if they collaborate with an existing auto industry like Tata motors it will give a boost to modernize our auto industry as a whole to become a south Asian hub.
Zillionaire 44 days ago
Correct immediately. Tax them double or treble as needed. No nonsense.