Nice little opener - obv the Indians arent happy
Cost Advantage to India? LOL What about the cost incurred to manage the disaster they create!
Now if only we had a gutsy Prime Minister who could tax those companies in the UK for offshoring.
Anti competition? Sod that! Its about looking after your tax payers!
Obama’s Plan on Corporate Taxes Unnerves the Indian Outsourcing Industry
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By HEATHER TIMMONS
Published: May 5, 2009
NEW DELHI — President Obama’s proposal to change the American corporate tax system is winning few fans in India, where some say it is aimed at curbing the country’s outsourcing industry.
Perhaps that is because Mr. Obama specifically struck out at the epicenter of Indian outsourcing.
The president vowed Monday to overhaul a tax code that allowed companies to pay less tax, as he put it, to “create a job in Bangalore, India, than if you create one in Buffalo, New York.” One element to that change could be the elimination of a deduction for American companies when they invest in subsidiaries outside the United States.
American companies have tens of thousands of employees in India in wholly owned subsidiaries. Many of these Indian operations handle customer service and back-office functions, particularly for banks and credit card companies. American businesses employ thousands more in India by contracting work to local technology and outsourcing companies.
And recently, many American corporations have also expanded their sales, marketing and distribution in India to take advantage of the country’s fast economic growth and expanding middle class.
Many business people in India were upset by Mr. Obama’s tax proposal. The president of the Associated Chambers of Commerce and Industry of India, Sajjan Jindal, said it could “kill the spirit of competition.”
The Indian affiliate of CNN spent Tuesday afternoon asking economists and politicians whether Mr. Obama was “anti-India.” An editorial in The Times of India said Bangalore had become a “catch-all term to hang U.S. economic woes on.”
What is unclear, though, is what, if any, impact Mr. Obama’s proposed tax plan will actually have on jobs in India.
“It’s a tax disincentive to discourage outsourcing to countries like India,” said Uday Ved, head of tax issues at KPMG India. But according to Mr. Ved and other international tax experts, companies do not move jobs to India because the tax rate is lower; they do it because labor costs less.
“We still believe that the cost advantage to India is so high” that American companies will continue to move some jobs to India, Mr. Ved said.
Raymond J. Wiacek, chairman of the global tax practice at Jones Day, said, “I don’t think it’s going to make a bean’s difference to India.”
He added, “India is a highly skilled but inexpensive labor market,” and not one where American companies have been accruing enormous profits in their foreign subsidiaries.
Some big American companies have large numbers of employees in India. For example, General Electric has about 14,500 employees in India, I.B.M. more than 74,000, and Citigroup more than 10,000. In addition, India’s information technology and outsourcing companies employ about 2.2 million people, and American companies account for about 60 percent of their business.
“The jobs aren’t coming back to the U.S. as a result of this proposal,” Mr. Wiacek said. The tax proposal is “about revenues and that’s it.”
http://www.nytimes.com/2009/05/06/bu.../06tax.html?em
Article Tools Sponsored By
By HEATHER TIMMONS
Published: May 5, 2009
NEW DELHI — President Obama’s proposal to change the American corporate tax system is winning few fans in India, where some say it is aimed at curbing the country’s outsourcing industry.
Perhaps that is because Mr. Obama specifically struck out at the epicenter of Indian outsourcing.
The president vowed Monday to overhaul a tax code that allowed companies to pay less tax, as he put it, to “create a job in Bangalore, India, than if you create one in Buffalo, New York.” One element to that change could be the elimination of a deduction for American companies when they invest in subsidiaries outside the United States.
American companies have tens of thousands of employees in India in wholly owned subsidiaries. Many of these Indian operations handle customer service and back-office functions, particularly for banks and credit card companies. American businesses employ thousands more in India by contracting work to local technology and outsourcing companies.
And recently, many American corporations have also expanded their sales, marketing and distribution in India to take advantage of the country’s fast economic growth and expanding middle class.
Many business people in India were upset by Mr. Obama’s tax proposal. The president of the Associated Chambers of Commerce and Industry of India, Sajjan Jindal, said it could “kill the spirit of competition.”
The Indian affiliate of CNN spent Tuesday afternoon asking economists and politicians whether Mr. Obama was “anti-India.” An editorial in The Times of India said Bangalore had become a “catch-all term to hang U.S. economic woes on.”
What is unclear, though, is what, if any, impact Mr. Obama’s proposed tax plan will actually have on jobs in India.
“It’s a tax disincentive to discourage outsourcing to countries like India,” said Uday Ved, head of tax issues at KPMG India. But according to Mr. Ved and other international tax experts, companies do not move jobs to India because the tax rate is lower; they do it because labor costs less.
“We still believe that the cost advantage to India is so high” that American companies will continue to move some jobs to India, Mr. Ved said.
Raymond J. Wiacek, chairman of the global tax practice at Jones Day, said, “I don’t think it’s going to make a bean’s difference to India.”
He added, “India is a highly skilled but inexpensive labor market,” and not one where American companies have been accruing enormous profits in their foreign subsidiaries.
Some big American companies have large numbers of employees in India. For example, General Electric has about 14,500 employees in India, I.B.M. more than 74,000, and Citigroup more than 10,000. In addition, India’s information technology and outsourcing companies employ about 2.2 million people, and American companies account for about 60 percent of their business.
“The jobs aren’t coming back to the U.S. as a result of this proposal,” Mr. Wiacek said. The tax proposal is “about revenues and that’s it.”
http://www.nytimes.com/2009/05/06/bu.../06tax.html?em
Now if only we had a gutsy Prime Minister who could tax those companies in the UK for offshoring.
Anti competition? Sod that! Its about looking after your tax payers!
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