Govt may extend tax holiday on dividends earned overseas

Feb 11 2013, 13:52 IST
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SummaryGovt hopes that the move would encourage corporates to plough funds back into the country

though it is a good move, the results so far have not been very encouraging.

Very few companies have used the provision to bring back the profit. However, if these also known as controlled foreign corporations (CFC) rules are introduced in the Budget 2013-14, chances are that companies would use the tax provision to bring back the profit as the tax rate would be lower than what is applied under CFC rules.

CFC rules essentially help the government to limit artificial deferral of tax by using offshore low taxed entities. CFC rules are a part of the proposed Direct Taxes Code, which is being considered by the finance ministry for implementation.

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