Japan seeks exemption from MAT for its cos in India

Japan has asked India to “at once” exempt Japanese manufacturers operating in India from withholding and Minimum Alternate Tax (MAT).

Minister, Embassy of Japan, Isomata Akio, on Thursday, asked for this country-specific concession. He said he was raising the demand in view of Japan’s commitment to pledging investments worth Rs.2-lakh crore in India over the next five years. He also said that if MAT continued to be slapped on the Indian subsidiaries of Japanese companies it could hinder Japanese investments into India.

For Indian companies, the MAT rate is 19.06 per cent of profits or if education cess and surcharge are applicable then the rate goes up to 20.01 per cent. The rate of MAT for foreign companies is 19.06 per cent and where education cess and surcharge are applicable it is 19.44 per cent.

“Japan investments and technology would flow in to India with uninterrupted pace provided India facilitated Japanese infrastructure companies to develop its currently under-developed infrastructure by demystifying its complicated tax regime, especially for trans-border transactions particularly for Japan in view of its growing bilateral trade and economic relations with India,” Mr. Akio said.

Mr. Akio was delivering the key note address at an international tax conference organised by the PHD Chamber of Commerce and Industry here.

He also demanded that New Delhi “judiciously address” the rising labour cost in India. According to him, labour costs have, in some instances, triggered industrial unrest for Japanese companies in India.

Two-way annual trade between the two countries was $16.31 billion as on March 31, 2014, down from $18.5 billion in the previous year. Japanese exports to India fell 23 per cent in 2013-14.