Money or Motherland?

I recently read about VC firms asking the founders of potential investee company to register in a developed country for the ease of doing business in general, and for friendly corporate tax in particular.

In that scenario, profit making startups doing business in India become tax payers to a foreign country when foreign funds invest in those companies. That looks like win-win for all as these companies create jobs in India and hence create individual Indian tax payers while they pay relatively less tax to a foreign country and increase profit for the investors.

There is no doubt India needs to improve on ease of doing business and have a business friendly tax regime in addition to drastically reduce corruption and bureaucratic processes. We also need to strengthen our laws for intellectual property rights.

Recently, in the budget this year, Indian finance minister announced gradually reducing corporate tax to 25% over 4 years to rationalize it. This is welcome.

That said, asking a company doing business in India to change its domicile to a foreign country seems like saying, we will invest in you, if you call my mother(land) yours and pay her 20% of your earnings than paying your mother(land) 30%. That is where companies seeking investments need to ponder if it is OK to deprive one’s mother(land) of 30% of earnings and pay a foreign country 20% to save 10% for themselves and their investors. This is where businesses need to have a heart over mind or financial acumen.

Thank you for reading. Shall highly appreciate your feedback.

Jai Hind!


Location: Nagpur, Maharashtra, India

Comments

Post a Comment

Popular posts from this blog

Preserving our heritage!

Image
Attached are photographs of a magnificent ancient Bawadi (stepwell) situated at Vela (Harishchandra) about 12 KMs from the zero mile, Nagpur. The Bawadi still has good clean water that is being used by the Church nearby. The structure is ill maintained like most other ancient structures in India and needs immediate attention from the Archaeological survey of India. We in India are so blessed by our forefathers to have these stepwells! It will be foolish of our generation to let these disappear without protection and care. All these stepwells should be declared heritage sites and protected with participation from local governments. It may be a good option to involve some corporates to augment resources for the maintenance of the historically and culturally important water bodies in these times of water scarcity. At a broader level, our whole country has thousands of such ancient monuments from Mahakali caves in Mumbai to Markanda in Vidarbh to Laksh
Read more

Irony of customer satisfaction!

We have a strong relationship for over 3 years with a reputed client, with 2 mission critical systems delivered and being maintained by us. We get multiple repeat orders from them every year. I thank them for their business. We were recently restricted from bidding for a relatively large project by the client saying that we are too small to bid for the project. The BRD for the project is written by us. This almost felt like a slap for providing delighting service to the customer over years at a price no one can beat! I don’t know how to react and hence this blog post. The lesson I learned from this is that its not always timely service at reasonable cost with good technical capabilities (overall, proven track record) and personal relationships, that help you grow. There are other factors at play beyond pure value-proposition that determine the choice of a vendor. Immediate reaction to this was that we increased our pricing to make sure we increase our profitability, as that i
Read more

Digital, Global and Available!

Some of this may sound repetitive but is increasingly relevant with each passing day. Considering the way, the Internet is evolving and engulfing various aspects of life, soon we may have one gigantic network, and any screen for all of the following, and more… ·        Information (the Web) ·        Communication (phone, email, chat, instant messaging - Whatsapp) ·        Entertainment and media (Videos, TV, Movies, Media, Social Media) ·        Education (information and knowledge as text, images, video and audio) ·        Commerce (Catalogs, Banking, payments) ·        Maps and Navigation (GIS, GPS, Uber and Ola) ·        Tourism and hospitality (Trip Advisor, Yelp, AirBnB!) ·        Healthcare (Telemedicine) ·        eGovernance ·        Devices (Mobile, Cars, and the Internet of Things – Networld!) ·        … and the list is growing … all this intertwined, hosted & operated from innumerable computers spread across the globe (cloud) that we
Read more