Scrap Withholding Tax & MAT on Japanese Companies In India: Suggests Minister, Embassy Of Japan

Minister, Embassy of Japan Mr. Isomata Akio asked India to exempt Japanese manufacturers, operating in India from withholding tax and Minimum Alternate Tax (MAT) so that these do not evolve into being one of the trade barriers and stagger Japan from becoming India’s largest trade partner in times to come.

Japan investments and technology would flow in India with uninterrupted pace provided India facilitated Japanese infrastructure companies to develop its currently under developed infrastructure by demystifying its complicated tax regime, especially for trans-border transactions particularly for Japan in view of its growing bilateral trade and economic relations with India, said Mr. Akio.

Delivering a key note address on International Tax Conference organized by PHD Chamber of Commerce and Industry, Mr. Akio said that India has subjected the subsidiary companies of Japan with withholding tax which at once needed to be removed from its statutes in view of the commitment of Japan to pledging Rs.2 lakh crores of investment in India in next five years.

Likewise, MAT has been revived in the Finance Act of 2011 as per which the Japanese companies are subjected to hundred per cent taxation which was proving as one of the trade barriers and may hinder the pace of Japanese investments in case these two taxations continue, added the Minister.

The rising labour cost was another issue that needed to be addressed judiciously by the Indian government which sometimes pave way for the industrial unrest for Japanese companies, the Minister indicated.

According to him, the number of Japanese companies operating in India which currently number 1072 will further rise as Japan looks at India with an added preference for its investments as way back in 2006, the number of Japanese companies that functioned in India were just 267.

The Minister said that the two way trade between the two countries by March 31, 2014 fell to $16.31 billion from $18.5 billion in the corresponding period with Japanese exports to India falling by 23 per cent in the last fiscal due to stagnation in the Indian economy. He, however, hoped that the Japanese export would witnessed considerable acceleration from this fiscal onwards as the Indian economy has began to revive with rising economic activities.