D Murali

Research Roundup - Sops for R&D

D. MURALI | Updated on September 25, 2011


Research and development (R&D) tax credits in the US provide golden, yet often overlooked, opportunities for manufacturers to recoup expenses of new product development, product changes or manufacturing process improvements, urges a fresh post in http://unitherm.com/blog. Recent changes to tax regulations and legislation have expanded these credits, making it easier for businesses to take advantage of the savings, notes the author Ashley Jernigan.

She cites Cedar Robinson, a corporate tax consultant with more than 18 years of specialised R&D tax credit experience for the view that businesses do not have to be a high-tech research type company to qualify for tax benefits. And that qualified research activities often include all phases of product upgrades, new product research and development, and product and manufacturing process upgrades to improve quality, reliability or efficiency.

“Most manufacturers are continuously improving production processes and efficiency as part of everyday operations and virtually all manufacturers develop new or improved products. As a result, Robinson indicated that nearly all manufacturers are eligible for the R&D tax credit.”

Closer home, the industry may benefit a lot if the taxman were to publish the functional details of various R&D claims that have made the grade in assessments in www.incometaxindia.gov.in.

Measurement of poverty

Poverty is a popular topic in India, with an infrequent dose of drama that the discussion dribbles into as in the case of the recent redefinition of the poverty line by the Plan panel. Looking around, you would find the issue hogging attention in mature economies too, such as the UK.

For instance, a recent study by the Institute for Fiscal Studies (www.ifs.org.uk) states that poverty amongst working-age adults without children, continues to rise and reaches new high, standing now at its highest level since 1961.

The study informs that the most widely-used measure of relative poverty is the number of people living in households with incomes below 60 per cent of the median (if individuals were lined up from richest to poorest according to their household income, adjusted for household size, the median income would be the household income of the individual in the middle).

An AFP report dated September 23, speaks of the new US data reflecting economic hard times. The percentage of all families under the poverty line has grown from 10.5 per cent in 2009 to 11.3 per cent last year, with 47.4 per cent of single-mother households with children under five living in poverty, one learns, from the American Community Survey of the Census Bureau. “The official federal poverty line is set at $22,314 for a family of four, and $11,139 for a single person.”

Wish our leaders currently in the US call for global approaches to poverty rather than being stuck in the ‘2G' discourse.

Inheritance tax

To raise funds for reconstruction of for disaster-hit areas in Japan, the Democratic Party is looking at the option of hiking inheritance tax. “The inheritance tax is levied on people who inherit cash, securities, real estate and other assets. The tax is calculated on the value of the inherited assets; the higher the value, the higher the tax rate, but the percentage of heirs who are actually obliged to pay the inheritance tax is under 10 per cent,” reports The Yomiuri Shimbun (www.yomiuri.co.jp).

The government included measures to hike inheritance tax revenues by about ¥280 billion yen in a bill for taxation reform in fiscal 2011, the site narrates. “The main points of the hike in that bill are measures that would raise the maximum tax rate from 50 per cent to 55 per cent, and reducing exemptions from the tax. The bill has not passed because of disagreements between the ruling and opposition camps…”

Inheritance tax is a topic that is worth debating in emerging economies, too, as a tool to mitigate disparities in wealth.

Revenues from gaming

Gaming can be fun, though running a gaming venture can be demanding in terms of compliance on a variety of fronts, including with the tax regulators. Laws vary from State to State, and coordinating sales tax on any online gaming law merchandise and making sure all money processing is fairly calculated can be a headache, cautions www.e-lawlibrary.com. Were you to research ‘gaming tax,' a top find is a Wikipedia page on Macau gaming law.

The taxation of casino concessionaires is made of a fixed part and a variable part, the site says. “The variable part falls on the gross gaming revenue. The tax rate is currently 35 per cent, plus two contributions of up to 2 per cent and 3 per cent for social and economic purposes. The maximum tax is therefore 40 per cent. In addition, a fixed premium is also payable, plus a premium per VIP table, other table, and slot machine. Gaming promoters pay taxes on commissions received.”

A post dated September 14, in www.onlinepoker.net, is titled, ‘ Hungary to levy online gaming tax.' The government is said to be considering the idea of introducing an electronic measuring system, to facilitate the charging of venues with bigger slots revenues higher taxes.

A recent decision of the European Commission that Denmark's online tax policy is compatible with the internal land-based market should be of interest to tax gamers. There are obvious differences between the business models employed by off and online operators and the fiscal impositions on those businesses need to reflect that differentiation, reasons a statement of the Remote Gambling Association, which supported the Danish Government's ability to vary its gambling tax rate.

“In essence, land-based operations compete within physical national boundaries, whereas online companies are part of a highly competitive international environment, and fiscal policy should be set accordingly. There are clear and justifiable reasons for a lower rate for remote operators,” reads a snatch, mentioned in http://totallygaming.com.

A promising industry, which can provide a lot more entertainment than politics.

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Published on September 25, 2011

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