Obama gets tougher; firms look to move out of U.S.
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Obama gets tougher; firms look to move out of U.S.

By SiliconIndia   |   Monday, 29 June 2009, 08:22 Hrs   |    22 Comments
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Obama gets tougher; firms look to move out of U.S.
Bangalore: At least half-dozen major corporations in the U.S. like Tyco International (TYC) and Ingersoll-Rand (IR) have proposed reincorporating in Ireland or Switzerland since October because of the U.S. President Barack Obama's plans to clamp down on corporate overseas tax maneuvering, reports Business Week.

This is because both Ireland and Switzerland offer big tax savings than the U.S. or Europe. Also, both of the countries have well-established tax treaties, which decide which country has primary taxing rights and help avoid double taxation. Paul Schmidt who heads the international tax practice at a law firm Baker Hosteller told Business Week that Switzerland's 'statutory' tax rate is 24 percent, which is a huge savings over the potential 35 percent federal tax rate that the business firms could owe in the U.S. Meanwhile, Ireland has a 12.5 percent corporate tax rate and a good working relationship with the Internal Revenue Service (IRS), according to Conor Begley, an independent tax consultant and Former Director of international tax at Grant Thornton.

According to the international tax experts, the U.S. based companies would face the exit charges (taxes based on lost revenue to the IRS for future earnings) and be removed from the Standard & Poor's 500-stock index. Several companies that have "re-domiciled" have been dumped from the index. So some companies could be scared off from relocating their official bases from the U.S.

J.Erik Fyrwald, the CEO of $4.2 billion water-treatment and chemicals company NALCO worries that changes to corporate tax law could also make U.S.-based companies targets for foreign acquisition. "If it got to where we were unable to effectively compete globally, we would have to evaluate our options."

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Reader's comments(22)
1: Mr Obama, you need to rethink on your policies.
Good lesson for his advisers by Tyko and others.
Posted by:Deepak Singhvi - 30 Jun, 2009
2: i do agree with this reader's comments. Tax havens exist just to serve the rich.
Posted by:marcus antonius - 30 Jun, 2009
3:
It's good....If they come to India, that will be very good.. :) :)
kamal Replied to: marcus antonius - 30 Jun, 2009
4:
i think ur right .........india is the only place wer anyone can survive and make money
madhu Replied to: kamal - 01 Jul, 2009
5: The comments coming are from the people who don’t know the social, political and economic systems of China, Ireland and Switzerland and advising to FM for modifications for foreign investors. FDI can’t be a backbone of any nation’s economy.

Today it’s US, Tomorrow it may be India. Capitalists don’t care for people’s jobs or nations requirements,they only know the profit & more profit. They take all advantages of subsidy. bailout packages provided by government on the cost of common peoples hard run money and run away when there turn of sacrifice comes.

Ban the so called tax havens is only remedy for such problems.


























































































































































































































































Posted by:Ujwal Latkar - 30 Jun, 2009
6: I believe we should grab this opportunity... I just hope oure finance minister will do some modifications for foreign investors so that Indians will get jobs and need not go abroad.
Posted by:Puneet - 30 Jun, 2009
7: Yeah... Thats right.. even countries like China which has language problems find this as an opportunity... Why shouldn't India use this... This is a great opportunity and we need to grab this right away... the govt must act Smart
Posted by:Shankar - 29 Jun, 2009
8:
Guys its a good news. Finance Minister ji Please make some good policies for foreign Investment and give more rebate to them in upcoming budget. So that they think to invest in India.
Nitin Replied to: Shankar - 30 Jun, 2009
9: Guys, While we say this let us not forget about a primary fact that Indian tax structure is pretty heavy and quite cumbersome.
Think of the pains that we go thru to save our hard earned money.
For a company, they have to do ethical business which means they need to have clear tax sheets.
In the end I feel this is amongst the best of times to kill our bureaucratic patterns and welcome the change.
Because at the end A Bill Can always be passed in Parliament! What say.
Posted by:PNC - 29 Jun, 2009
10: Wish our Finance Ministry has it's eyes n ears open..
Posted by:Prashanth Tikare - 29 Jun, 2009
11: We should also concentrate on manufacturing sector as it is a long term investment by foreign companies. I think our neighbor China is using this path very effectively over the overs. The added advantage is that no company can close their business at a short term as manufacturing units require huge investments and involves huge workforce.
Posted by:Arvind - 29 Jun, 2009
12: I too feel that India Govt. should take the advantage. Let those company to start up business in india, atleast lot of people get job.
Posted by:Arindam - 29 Jun, 2009
13: yes it is true

Indian government should think about it
Posted by:Padma - 29 Jun, 2009
14: Why not India take advantage and give tax relief or reduce hefty charges they make to set up business for foreign companies. At least Indian people will get jobs and they need not go abroad and get laid off.
Posted by:karan - 29 Jun, 2009
15:
I totally agree with you Karan. We have liberalized our markets already and liberalization on our tax policies will not take much time. Moreover most of the companies look at having talented workforce at a lesser rate and India has been a hub for a long time now.
Arvind Replied to: karan - 29 Jun, 2009
16:
Don't we already have tax-holidays for IT companies? ? ? Dudes, where would the government generate income from - salaried people only? ? ? ?

Ireland and Swizterland are not that industrial in nature. They wanted to attract industry.

Kneeing more towards businessmen will gradually shift the stuff from democracy to clear capitalism as US experience in 1970s.
Yogendra Namjoshi Replied to: Arvind - 30 Jun, 2009
17:
it has to happen in near future, couldn't you enumarate the infrastrucure and basic requirement of the ever growing indian population... there is no way out of it we have to grab the opportunity at the right time ..but by saying that i also mean the the environmental laws for industry should be tuffer and goverment should carry out more effort to make it clean and free of hazards...
Sushanta Dash Replied to: Yogendra Namjoshi - 30 Jun, 2009
18:
Frnds you are absolutely right. Indian government should think over this and attract the foreign companies in India. This will not only benefit Indian but will also help our country to grow.
Anand Replied to: karan - 29 Jun, 2009
19:
you r right mr karan, INDIA may think this and they can bring some foreign companies here, so that indians will be benifited much.
arulsabari Replied to: karan - 29 Jun, 2009
20: Common, I think the new tax rules planned by Obama is rather for the economic destruction.
Posted by:Ravi - 29 Jun, 2009
21:
Like this we cannot make in india,Because government get money from Tax only,But they can reduce and develop our country ,see some politics spending money for making status at UP,Like poor Government present in our county and People also, We need to develop our self.
Elayaraja Replied to: Ravi - 29 Jun, 2009
22:
It is a good opportunity at this time of recovery from recession.First,our political climate to be conducive for outsiders to invest and we also get the benefits of jobs and technological advancement.The Govt.as it is strong now should act immediately with urgent reforms to bring in foreign investment.
Sitaram Replied to: Elayaraja - 29 Jun, 2009
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