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graph LR subgraph "Residency & POEM" A[Start] --> B{Individual/Company} B -- Resident --> C[Taxed on Global Income] B -- Non-Resident --> D[Taxed on Indian Income] E[Company Residency] --> F{Pre-POEM: Based on Incorporation/Mgmt Location} F --> G[Potential for Tax Avoidance] E --> H{POEM (2016): Based on Place of Effective Management} H --> I[Focus on Actual Control & Decision Making] G --> J[End] I --> J end subgraph "BEPS" K[Start] --> L[Multinational Companies] L --> M{Exploit Gaps in Tax Rules} M --> N[Profit Shifting] N --> O[Transfer Pricing, IP Migration, Debt Financing] O --> P[Base Erosion & Profit Shifting (BEPS)] P --> Q[OECD Inclusive Framework] Q --> R[Global Efforts to Counter BEPS] R --> S[End] end subgraph "DTAAs" T[Start] --> U[Double Taxation] U -- Juridical --> V[Same Income taxed by 2 Jurisdictions] U -- Economic --> W[Same Economic Activity taxed twice] V --> X[DTAA (Bilateral Treaty)] W --> X X -- Exemption Method --> Y[One country exempts income] X -- Credit Method --> Z[Tax credit for taxes paid elsewhere] Y --> AA[End] Z --> AA end subgraph "Global Minimum Tax" AB[Start] --> AC[Tax Competition (Race to the Bottom)] AC --> AD[Need for Minimum Tax] AD --> AE[OECD Proposal: 15% Minimum Tax] AE --> AF[Income Inclusion Rule (IIR)] AE --> AG[Undertaxed Profits Rule (UTPR)] AF --> AH[End] AG --> AH end subgraph "Two-Pillar Solution" AI[Start] --> AJ[Digital Economy Tax Challenges] AJ --> AK{Pillar One: Profit Reallocation} AJ --> AL{Pillar Two: Global Minimum Tax} AK --> AM[For Large MNEs with Market Presence] AL --> AN[15% Minimum Tax] AM --> AO[Challenges in Implementation] AN --> AO AO --> AP[End] end subgraph "Transfer Pricing" AQ[Start] --> AR[Transactions between Related Entities] AR --> AS[Potential for Profit Shifting] AS --> AT[Transfer Pricing Manipulation] AT --> AU[Arm's Length Principle] AU --> AV[Regulations to Ensure Fair Pricing] AV --> AW[End] end subgraph "Indirect Transfers" AX[Start] --> AY[Transfer of Ownership of Parent Company] AY --> AZ[Indirect Transfer of Subsidiary] AZ --> BA[Potential for Tax Avoidance] BA --> BB[Vodafone Case Example] BB --> BC[Policy Changes to Address Indirect Transfers] BC --> BD[End] end subgraph "Cess vs. Surcharge" BE[Start] --> BF[Tax on Base Tax Liability] BF -- Specific Purpose --> BG[Cess] BF -- Additional Charge on Tax + Cess --> BH[Surcharge] BG --> BI[Clear Objectives] BH --> BJ[Objectives may not be clear] BG --> BK[Not shared with states] BH --> BL[Generally not shared with states] BI --> BM[End] BJ --> BM BK --> BM BL --> BM end
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