To Boost Trade, A Bilateral Tax Treaty Between India And The UK May Be In The Offing

Following British Prime Minister Theresa May’s visit to India last week, Patricia Hewitt, chair of the UK-India Business Council, said that Britain is looking to re-balance its commercial links with countries like India post-Brexit. She suggested that the two governments should look at a bilateral tax treaty to boost trade. She expressed her views in an interview to Mint (read here).

Hewitt said that at the CEOs forum meeting, certain informed proposals were made for a possible bilateral tax treaty to create a modern framework, ensure there is the right climate for investors and to enable maximum amount of capital from the city of London to come directly into India. Earlier, much of this was going through Mauritius and some via Singapore.

She emphasised that a possible tax treaty will guarantee that investors don’t find themselves subject to double taxation. As an example, she spoke of Vodafone Plc, which is covered by a double taxation treaty with the Netherlands but not with India. This is the reason why so much British investment was routed via Mauritius and Singapore. She believed both governments were receptive to the idea.

When asked about the sentiments among British businesses regarding India, Hewitt mentioned a survey of British companies with an interest in India which commended the reforms carried out by the ruling government in the past two years.

She claimed that about 60 per cent of the companies said they were more likely to increase their investment in India in the coming years. The reforms include the introduction of the Goods and Services Tax, the bankruptcy laws and lifting of the caps on limits in FDI.