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Question ID : 31675

set up of an Entity in foreign country

One of our client is planning to set up an entity in foreign country. Whether it will be a Branch of Indian Company or a Subsidiary Company is not yet finalized. However i would like to know tax implications if any while suggesting for a suitable entity to client. Please let us know on following 1. If Branch is set up then under FEMA company is permitted to make certain remittance to meet initial expenses of the Branch further company is also permitted to make certain remittances to meet recurring expenses of the branch office – in this remittance whether in withholding tax compliance will come if Branch raises a Debit note where the expenses like Salary to employees, lease rentals, purchase of computers, furniture office equipment’s etc are included? 2. If Branch raises an Invoice on Company in India with respect to work done for Company then what all tax compliances need to be completed? Whether transfer pricing will be applicable? Withholding of tax will be applicable? 3. Above two questions also remain if the client decides to set up a subsidiary company instead of Branch. 4. Also please let us know if any other tax related provisions we should inform client before decision with respect to suitable entity is finalised.

Posted by KESHAV TAD on Jun 04, 2018