The Hindu Business Line : Accountancy, consultancy sectors -- Tax income repatriated by foreign cos: Panel

THE Government-appointed working group to help prepare a request list in accountancy sector for submission to the World Trade Organisation (WTO) has suggested imposition of an appropriate levy on income repatriated out of India by the global firms in the accountancy and consultancy sectors.

The group is of the view that income repatriated by such foreign entities need to be regulated. It also held that the approval of the concerned institution regulating the profession should be made mandatory before a firm or corporate entity is permitted to perform the declared services falling under the domain of the regulated profession.

Sources said that the group also suggested that the foreign entities might be, as an alternative to the imposition of a levy, made to invest their earnings in India, in one form or other.

"This is particularly necessary because the dominant global firms are leveraging on low costs and repatriating substantial portion of fees/service charges. Despite regulatory framework, the dominant firms in accountancy, consultancy, legal and allied sectors have been able to establish commercial presence in India by circumventing through RBI and corporate entity permissions," sources said.

The group also drew the Government's attention to the cases of multinational companies investing through FDI route insisting on foreign accounting firms or their disguised associates in India, as their service providers for rendering services.

It was suggested that this issue should be taken as an Entry of Reservation. "This tendency should also be discouraged while granting FDI approval," sources said.

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