Does Obama’s tax policy impact Indian IT firms?
President Barack Obama has announced a new tax proposal on 04th May 09 for US multinational companies. The basic idea of Obama’s new tax rule is to close a loophole that allows US firms to avoid paying tax on profits earned from overseas operations in countries like India. In addition, it helps to generate incremental revenue for the US government. Deloitte tax analysts estimate that the Obama tax policies could boost overall US corporate taxes on average by 8%.
The US administration aims to save $210 billion over the next decade. It is important to note that most of the American multinational companies earn more than 50% revenues from overseas operations. Under the corporate tax system , companies that invest on overseas operations would not be able to receive deductions on their U.S. tax returns until they pay taxes on offshore profits.
Obama asked Americans to pay taxes if they outsource a job in other countries. Some big multinational corporations are struggling to block the portion of Obama’s new tax system. But Obama replied to them as “I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not by outsourcing jobs to overseas”.
CEO of Infosys Technologies, India’s second-largest IT service provider states that, “Right now, I do not see any impact on Indian IT firms”. A real fact is that many companies are depending on Indian firms for growing their total earnings, so they will outsource jobs to India for earning more revenue.
Tags: avoid paying tax, Obama's new tax rules, Obama's new tax system, Obama's tax policies, Obama's tax rules