Obama's tax plan to make Indian IT more competitive
By siliconindia   |   Wednesday, 06 May 2009, 23:13 IST   |    2 Comments
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Obama's tax plan to make Indian IT more competitive
Bangalore: The taxation plans of the Obama administration can be a blessing in disguise for the Indian IT majors like TCS, Infosys and Wipro. The Indian companies would turn more price competitive as the new plan will put additional tax burdens over their counterparts like IBM, HP and Accenture. Analysts say the fresh tax impositions would mean that American IT service providers will increase their billing rates. It would allow Indian companies to become correspondingly more competitive in any IT project for which they are bidding against American competitors. "Through the years, these five companies have avoided U.S. income taxes and foreign withholding taxes on a combined $72 billion in undistributed earnings from their foreign operations," an AP report said. "It would be like an earthquake for high tech. On a Richter scale of 1 to 10, this would be a 12," Carl Guardino, CEO of Silicon Valley Leadership Group, an industry trade association said. Google's effective tax rate would have been 45 percent at over $1 billion instead of 28 percent if it hadn't been able to capitalize on lower rates overseas. HP reaped $1.8 billion benefit in its fiscal 2008 from lower foreign tax rates while Cisco and Microsoft each saw benefits of over $1.6 billion. IBM's foreign tax advantage last year totaled about $1.3 billion.

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