Category: Tax Havens and Harmful Tax Practices

Tax havens are jurisdictions that offers favorable tax conditions and secrecy to taxpayers as relative to other jurisdictions. There is no generally accepted definition of a tax haven, but commonly associated with such jurisdictions are low or no-taxes, no withholding taxes, and strict laws on secrecy.
Harmful tax practices refers to countries issuing highly favourable tax rulings and implementing preferential tax rules/regimes to attract foreign income, thereby eroding the tax bases of other countries.

India vs. Li & Fung (Trading) Ltd. March 2016, ITTA

India vs. Li & Fung (Trading) Ltd. March 2016, ITTA

/ Contributed no value, Delineation - Substance over Form, Delineation - Substance over Form, Hong Kong, India, No substance, Performed all critical functions, Sales and Marketing Hubs, Sales and Marketing Hubs, Services and Fees, Services and Fees, Sourcing services, Tax Avoidance Schemes, Tax Avoidance Schemes, Tax Havens and Harmful Tax Practices
Li & Fung (Trading) Ltd., Hong Kong, entered into contracts with its global third party customers for provision of sourcing services with respect to products to be sourced by such global customers directly from third party vendors in India. For the sourcing services, the Hong Kong company received a 5% commission of the FOB value of goods sourced. The company in India was providing sourcing support services to the Hong Kong group company, and remunerated at cost plus 5 percent mark-up for provision of these services. The tax administration found that the the company in India should get the 5% commission on the free on board (FOB) value of the goods sourced from India as the Hong Kong company contributed no value. The Tribunal held that the compensation received by the company in Hong Kong – 5% of the FOB value – should be distributed between the company in India and the company in Hong Kong in the ... Continue to full case