The Hindu Business Line : `Taxation laws must allow cos to grow'

Addressing a two-day seminar on `Taxation in globalised era', he said, "Taxation and governance observed in many countries today is obsolete in the context of growing world trade."

The seminar was organised by International Fiscal Association (IFA) and the Madras Management Association. IFA is engaged in shaping the evolution of tax and fiscal policies across the world.

`Business generator'

"Today taxation is no longer only revenue for governments, it is a business generator. We must think of how to take taxation to a global level," he said.

In the wake of the growing IT business in India, the need for evaluating taxes for Web businesses was cited. "Permanent establishments are not valid for such businesses. Should companies then be taxed on the locations of their business or the location of their customers?" Mr Justice Shah posed.

Responding to a point made by some participants of the seminar on lack of clarity on areas like royalty fee for technical services, Mr Justice Shah said that it was a complex subject despite judicial interpretations of the domestic laws. It was necessary in such cases, he said, to determine the actual tax, rate of tax and the mode of deduction (whether at source or otherwise). The need for a global tax collection system through co-operation between countries was discussed at a seminar on taxation policies.

Taxation policies

"For instance, it is not possible for governments to collect taxes and then distribute them equally among other countries. Such a system undermines the sovereign nature of countries," said Mr Justice Shah.

Others topics discussed in the seminar included determining the taxable income of MNCs, optimising tax returns, taxation laws in emerging markets and the importance of taxation in the regime of mergers and acquisitions.