New rules to tax MNCs cards as OECD pact stalls

Rules will cut discretion, bring in objectivity; move follows US exiting global

- Gireesh Chandra Prasad

India will soon issue a new set of rules to determine how foreign companies' profits earned in India will be taxed, in an effort to reduce litigation and bring more objectivity and clarity to taxation, two persons familiar with the development said.

The timing of the rules, the broad principles of which were first outlined by the Central Board of Direct Taxes (CBDT) in a 2019 expert committee report, coincides with the withdrawal of the US from a global tax deal. The deal was brokered by the Organization for Economic Co-operation and Development (OECD) to curb aggressive tax avoidance mainly by tech giants and the race to lower taxes by countries to attract capital.