'India fares poorly on certainty of tax laws'

According to a survey conducted by consultancy firm Deloitte, India is the worst in terms of predictability of tax laws in the Asia-Pacific.

As many as 75 per cent of respondents in the Asia-Pacific tax complexity survey of 800 tax executives across 20 countries said the predictability of tax laws was either poor or non-existent in China, India and Indonesia.

"India is seen as changing its tax positions too rapidly compared to others in the region. There are tax challenges in every jurisdiction, but to the degree it is happening in India, it is not there in other countries," said Neeru Ahuja, tax partner, Deloitte India.

Many respondents thought the complexity, consistency and predictability of the Chinese and Indian tax regimes would play a significant role in determining their investment decisions. About two-thirds of the respondents operating in China, India, Hong-Kong, Singapore, Australia and Japan thought consistency was the most important issue to deal with when taking business decisions.

Most respondents felt the Indian, Chinese and, to a lesser extent, Indonesian tax regimes had become more complex, with 81 per cent, 77 per cent and 57 per cent of them, respectively, saying these tax jurisdictions had turned more complicated compared to 2010, when the last such survey was carried out.

A cumulative 31 per cent of the respondents said the consistency of tax regimes across the region had changed, with about 20 per cent saying such regimes had become less consistent. A total of 54 per cent of the respondents believed the Indian tax regime had become substantially less consistent than four years ago.

About 40 per cent of the respondents who had business operations in India said they had been audited by local tax authorities through the past three years. In comparison, 33 per cent of respondents with operations in mainland China said they had been audited.

As many as 89 per cent respondents said Chinese authorities were rigorous in carrying out tax audits. For India, the number was higher, the Deloitte survey report said.

It added about 80 per cent of the respondents were confident in the effectiveness of the tax administrative procedures in place in Hong Kong, Singapore, Australia, Japan and New Zealand. The number of respondents confident about the effectiveness of the administrative procedures of China, India and Indonesia to resolve a tax issue was the lowest.

Asked to identify the three most complex tax jurisdictions in the Asia-Pacific region in 2017, an overwhelming number of respondents felt the tax regimes in India, mainland China and Indonesia were the top three most complex tax jurisdictions. "A total of 88 per cent of the respondents felt India would be one of the most complex tax jurisdictions in the next three years," the report said.

However, most respondents felt the Chinese and Indian tax regimes would be among the top three jurisdictions in the region to see the most material change through the next three years.
POOR SHOW

• 75% of respondents said predictability of tax laws was either poor or non-existent in China, India and Indonesia
• 31% of respondents said the consistency of tax regimes across the region had changed
• 54% of respondents said the Indian tax regime had become substantially less consistent than 4 years ago
• 40% of respondents who had business operations in India said they had been audited by local tax authorities in the past 3 years
• 80% were confident of the tax administrative procedures in Hong Kong, Singapore, Australia, Japan and New Zealand