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International Operations Update

April

Value Added Tax (VAT) can pose a number of thorny problems for US companies unfamiliar with the procedures involved, but taking control of your company’s VAT – including your reclaim opportunities - has never been more important.

Under a new bill effective July 1, 2012, companies with 20+ workers must submit to their works councils an annual plan for employing older workers.

Under a program introduced in 2010, employers who create new jobs may be eligible for an exemption from liability to pay their share of PRSI for certain employees.

Canadian employers may hire foreign workers on a temporary basis to fill immediate skills and labor shortages when Canadians and permanent residents are not available.

As of April 8, all PAN applications must be submitted via the new forms prescribed by the Income Tax authorities.

Under the proposed introduction of “negative list”, all services in India will become taxable (except a list of 17 services, mainly in the education and entertainment sectors).

In another example of the need for thorough and detailed documentation of international operations, we bring your attention to a recent determination of India’s Income Tax Authority for Advance Rulings (the AAR).

The proposed law includes rules governing the exit and entry of Chinese nationals and foreign citizens, requirements on the stay and employment of foreigners in China, and penalties for violations.

Under Provisional Measure* 563 announced in early April, a program offering reduced employer social security contributions (INSS) previously available to companies on a small list of industries has been expanded to include eleven new industries.

Over the course of the past year, the Indian tax authorities have been challenging the claims of many LOs that their activities do not constitute PE. At the same time the transfer pricing authorities have also ramped up investigations, finding significant profits attributable to some LOs.