CBDT's taxation proposal to hit loss-making foreign companies: Experts

According to proposals for companies with global losses or global profit margin of less than 2 per cent, the Indian profits would be deemed to be 2 per cent of the revenue or turnover

Loss-making multinational companies with a permanent establishment (PE) or business connection in India could be adversely hit if the income tax department’s recent proposals are implemented. 

According to domestic laws, an MNC having a fixed place of business in India is considered as having PE and is taxed. 

According to proposals, as contained in the draft report released for public consultation, for companies with global losses or global profit margin of less than 2 per cent, the Indian profits would be deemed to be 2 per cent of the revenue or turnover. 

This, tax experts argue, is an incorrect way of taxation and