IT-BPO industry shrugs off Obama's threat to tax outsourcers

The Indian IT-BPO industry has shrugged off the US President, Mr Barack Obama's threat to levy a basic minimum tax on foreign earnings of US firms that outsource jobs.

“Ultimately, it is business sense that wins the day. We are yet to see the nitty-gritty of the framework he was referring to. But the US companies spread across the world would weigh the pros and cons and then decide how to go about this,” Mr J.A. Chowdary, a TiE (The Indus Entrepreneurs) leader, told Business Line .

“MNCs are no longer coming to India for just cost advantage. India itself has emerged a market for companies such as Dell and IBM. They will factor in the local business interests before taking a serious decision,” he said.

Mr Ganesh Natarajan, Vice-Chairman and CEO, Zensar Technologies, welcomed the move to lower corporate tax. “Good for us if IT subsidiaries of Indian firms are included,” he said.

On Wednesday, Mr Obama continued his strong criticism of US companies shipping jobs out of the country. Referring to a framework, he said companies that outsource projects, and thereby move jobs out of the US, could be levied a basic minimum tax.

This framework for reform “simplifies the tax code, eliminates dozens of tax loopholes and subsidies, and promotes job creation right here at home, ” Mr Obama said.

“No company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. As I said in the State of the Union, it is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America,” he said.

“Our current corporate tax system is outdated, unfair, and inefficient. It provides tax breaks for moving jobs and profits overseas and hits companies that choose to stay in America with one of the highest tax rates in the world,” he said. (With inputs from Abhishek Law in Kolkata)

>kurmanath@thehindu.co.in

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