India behind competitors in tax reform

Tax planning has assumed great significance for Indian corporates as they are high on foreign acquisitions. For companies going for foreign acquisitions, tax laws in other countries also become important as they integrate their acquisitions and also keep in mind the interests of their shareholders. This came out during discussions at a CII-KPMG workshop on international tax strategies today.

It was also observed that China and Russia, India’s main competitors for a share of the global economic pie, were undergoing important tax reforms. China is in line to introduce the proposed Unified Enterprise Income Tax Law by January 1, 2008, which seeks to bring about a level playing field for Foreign Investment Enterprises (FIEs) and domestic enterprises. It proposes a standard corporate tax rate of 25 per cent (for small-scale enterprises with a small profit it is 20 per cent).