Wednesday, August 18, 2021
India’s retrospective tax legislation in 2012, to tax indirect transfer of Indian assets by non-resident companies, has been contentious since its introduction. Over nearly a decade, it has invited severe criticism from stakeholders and the international community, damaged India's reputation as an attractive investment destination, and given rise to several disputes between foreign investors and the Government of India. Last week, Government of India responded to the situation by proposing withdrawal of the retrospective tax legislation.
How effective is the Government’s move for the investor community? What must investors be mindful of while settling and preventing disputes between investors and the Government of India? What is the fate of the existing international arbitration cases? What are the learnings for global M&A transactions? Join us at a virtual round-table as we address these questions, discuss the impact of the proposed withdrawal on foreign companies and investors, and pave the way forward.
Focus Area
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Changes proposed to the indirect transfer tax provisions
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Shortcomings in the proposal
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Impact on international arbitration cases
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Learnings and innovative structures for global M&A transactions going forward
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Next steps for foreign investors in India
Our Reading Materials
Flow of the session
04:00 PM - 04:50 PM (IST) |
Discussion by the Speakers |
04:50 PM - 05:00 PM (IST) |
Q&A |
Background
Pursuant to its retrospective tax legislation in 2012, India raised tax demands on foreign companies engaged in indirect transfer of Indian assets. Since taxation is a sovereign measure of the Government of India, and recourse before Indian courts may not have been efficacious, notable investors like Vodafone B.V., Cairn Plc. and Vedanta Ltd. challenged the measure and the tax demands in international arbitration proceedings invoked under bilateral investment treaties between India and Netherlands, and India and the United Kingdom.
In the cases involving Vodafone B.V. and Cairn Plc., arbitration tribunals ruled that India had breached its fair and equitable treatment obligations under the relevant bilateral investment treaties, and passed awards in favour of the investors. India was directed to reimburse GBP £4,327,294.50 in legal costs to Vodafone B.V., while Cairn Plc. was awarded USD 1.2 bn in damages. India has challenged the awards, while Cairn has sought enforcement of the international arbitral award against India in several countries. The most marked of these enforcement measures is a petition in U.S. courts to attach assets of the Indian airline ‘Air India’.
In August 2021, India has proposed to withdraw the retrospective tax legislation of 2012, and place an embargo on future tax demands arising out of any indirect transfer of Indian assets undertaken before May 28, 2012. It also proposes to nullify tax demands already raised for indirect transfers made before May 28, 2012 subject to fulfilment of certain conditions.
Speakers
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VYAPAK DESAI
Head - International Litigation & Dispute Resolution, Nishith Desai Associates
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Vyapak is a Senior Attorney in the Corporate and Securities Practice group at NDA. Vyapak holds a Bachelors degree in law and a Masters degree in Commercial Laws. He is also a trained Mediator/Conciliator and an experienced arbitrator in international commercial arbitrations.
He is a Co-chair- Council of MCIA, Director of CIArb India Branch, Member of IBA, IPBA and the Bar Council of Maharashtra & Goa. He is listed on SIAC Panel of Arbitrators, LCIA Database of Arbitrators and BVI IAC Panel of Arbitrators. Vyapak represents clients in a wide-range of services with a special focus on cutting edge cross - border and complex litigations in various courts in India and abroad including disputes related to shareholders agreements, international trade, oil & gas, infrastructure and construction, investment treaty involving international commercial arbitrations under rules of ICC, LCIA, SIAC, ICDR-AAA, UNCITRAL etc. He is known for
adopting a reasonable, pragmatic and solution oriented approach for his clients.
He is also a co-author of a chapter in the book titled Enforcing Arbitral Awards in India published by Lexis-Nexis 2017. Vyapak is often on the speaker circuit for both domestic and international conferences and has authored several articles on various topics concerning cross border litigation and international commercial arbitration.
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PARUL JAINCo-Head – International Tax and Funds Formation, Nishith Desai Associates
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Parul co-heads the International Tax Practice at Nishith Desai Associates. A lawyer and a chartered accountant by profession, she has close to two decades of experience in corporate and international tax field and specializes in M&A transactions and Private Equity space. Prior to joining Nishith Desai Associates, she was partner at M&A Tax practice in one of the Big Four accounting firms. She advises extensively on cross border taxation, acquisition and reorganisation strategies including debt funding and investment strategies. She has also worked closely with renowned fund managers in structuring set up of their offshore and domestic fund platforms, including providing advice on carry structuring from a legal and tax perspective.
She has been recognized by International Tax Review World Tax 2013 and has also been listed in The Legal500 Directory. She has also been recognized as one of the Leading Women Leaders in Tax 2016, 2017 and 2019 by International Tax Review.
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NISHCHAL JOSHIPURAHead – Private Equity and M&A, Nishith Desai Associates
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Nishchal has lead several high profile deals in M&A and Private Equity space in India and set up various Indian focussed funds. He advises strategic acquirers and Private Equity funds on legal and tax aspects of cross border deals in listed and unlisted space with a special focus on control deals. He has designed and implemented some of the most innovative structures for M&A and Private Equity deals in India and his structures have been consistently recognized as most innovative by Financial Times of London and RSG.
He also specializes in advising both offshore and domestic LPs and GPs on fund formation and has set up multiple funds across various asset classes such as private equity, distressed, venture capital, infrastructure, real estate, hedge funds, etc.
He has been recognized by "Who's Who Legal 2020" for his contribution to the field of Private Equity in India. He has been “Highly Recommended” and “Highly Regarded” by various legal directories for legal and tax advice on M&A, Private Equity and Investment Funds. He was nominated as a “Young Achiever” at the Legal Era Awards based on industry research, reviews, rating and surveys conducted by Legal Era.
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KSHAMA A LOYALeader – International Litigation & Dispute Resolution, Nishith Desai Associates
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Kshama advises and represents clients in complex cross-border commercial disputes, public and private international law disputes, civil and criminal litigation, commercial litigation and litigation arising out of international and domestic arbitration in Indian courts. She has advised on issues in a range of industries including Energy, Mining, Infrastructure, Construction, Manufacturing, Pharmaceuticals and Life-sciences, Funds, Finance, Travel and Transportation, Automotive, Media and Entertainment, Aviation, Advertising etc.
Kshama regularly appears in courts and tribunals in India, and acts as counsel in domestic and international arbitration proceedings. Kshama began her practice as a counsel in the Chambers of (present) Justice S.V. Gangapurwala, High Court of Bombay. She holds an LL.M. in International Commercial Laws from King’s College London, and has studied Negotiation at Harvard Law School. She has also taken special courses in cross-examination in international arbitration in London, and in international investment law in Switzerland. She has worked in London on international commercial and investor-State arbitration.
Kshama holds positions of responsibility with international arbitration associations such as the Chartered Institute of Arbitrators, American Arbitration Association – International Centre for Dispute Resolution and the Inter- Pacific Bar Association.
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ASHISH SODHANILeader – International Tax Practice, Nishith Desai Associates
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Ashish is a leader of the International tax practice group at the multi-skilled and strategy driven international law firm, Nishith Desai Associates.
Ashish focuses on cross border tax and corporate structuring transactions including tax litigation. He has been involved in issues relating to applicability of Minimum Alternate Tax on foreign investors before the High Court, indirect transfer tax issues before the Tribunal and has represented clients before various forum’s including Tribunals, various High Courts and Supreme Court of India in relation to disputes on international tax. He has also acted and advised on several cross-border mergers and acquisitions and has significant experience on private equity investments. He regularly advises foreign education institutions, EdTech companies, pharmaceutical companies, not-for-profits on various Indian tax laws.
Ashish has also been involved in regularly advising the gaming industry, BPOs, healthcare and IT/ITES with respect to issues on withholding tax, goods and service tax.
Ashish graduated holds a bachelor’s degree in law from esteemed Government Law College, Mumbai, India (University of Mumbai). He regularly writes articles which are published in international leading publications.
