Thakur
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- 30 Aug 2013
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NEW DELHI:The Cable. and Satellite Broadcasters
Association of Asia (CASBAA)has urged Finance Minister Arun Jaitley
to withdraw the royalties imposed on foreign satellite operators (FSO) by the Finance Act
2012
and 2013 and let the matter be settled by the
Supreme Court which is presently hearing a
matter in this regard.
The Delhi High Court had in January 2011 held
in the case of Asia Satellite
Telecommunications company Limited (AsiaSat)
that the charges received by the Hong Kong
based FSO from its customers for provision of
transponder capacity cannot be characterised
as 'royalties' under the Income Tax Act as it
stood prior to the amendment in 20l2. It was
held by the court that the equipment was used
by the FSOs to provide a service to their
customers and so the question of royalty
taxation did not arise.
The memorandum by CASBAA CEO Christopher
Slaughter says that this view of the High Court
was in conformity with the international
jurisprudence and model commentaries issued
by international tax bodies and renowned
jurists / authors and was also followed in case
of other FSOs by the High Court and Income
Tax Appellate Tribunals.
However, the memorandum sent to Jaitley with
a copy to Information and Broadcasting (I&B)
Minister Prakash Javadekar points out that the
matter has become sub judice as Income Tax
authorities have filed an appeal against this
judgment in the Supreme Court.
I&B Ministry sources told indiantelevision.com
that CASBAA has also protested the rise in
royalty under the Finance Act 2013 from 10
per cent to 25 per cent as it is not reasonable
in view of the competitive margins earned by
the industry players. The Association wants the
Minister to roll back this increase so that the
tax rates are made ‘friendlier’ and both the
operators and consumers can benefit from a
rational tax regime.
It is stated that a majority of the Double
Taxation Avoidance Agreements (DTAA) that
India has entered into provide for a tax rate
(on gross basis) on royalties and fees or
technical services of 10 per cent.
Thus, taking a holistic view from the point of
alignment with the DTAAs and internationally
accepted tax rates, the rate of 25 per cent is
highly unjust and implies that FSOs are earning
high revenues from India which is not the
case.
Furthermore, any such step to increase tax
rates is not right as the matter is sub judice in
the Supreme Court. It not only makes the
services ‘cost ineffective’ but hits the ultimate
Indian end consumers.
Slaughter points out that India's participation
in the global network of satellite
communication is growing and any such move
by the Indian Government to tax FSOs may
also drive policy-makers of other nations to
adopt similar measures for taxing payments
flowing into India from foreign jurisdictions. http://www.indiantelevision.com/sat...royalty-on-foreign-satellite-operators-140709
Association of Asia (CASBAA)has urged Finance Minister Arun Jaitley
to withdraw the royalties imposed on foreign satellite operators (FSO) by the Finance Act
2012
and 2013 and let the matter be settled by the
Supreme Court which is presently hearing a
matter in this regard.
The Delhi High Court had in January 2011 held
in the case of Asia Satellite
Telecommunications company Limited (AsiaSat)
that the charges received by the Hong Kong
based FSO from its customers for provision of
transponder capacity cannot be characterised
as 'royalties' under the Income Tax Act as it
stood prior to the amendment in 20l2. It was
held by the court that the equipment was used
by the FSOs to provide a service to their
customers and so the question of royalty
taxation did not arise.
The memorandum by CASBAA CEO Christopher
Slaughter says that this view of the High Court
was in conformity with the international
jurisprudence and model commentaries issued
by international tax bodies and renowned
jurists / authors and was also followed in case
of other FSOs by the High Court and Income
Tax Appellate Tribunals.
However, the memorandum sent to Jaitley with
a copy to Information and Broadcasting (I&B)
Minister Prakash Javadekar points out that the
matter has become sub judice as Income Tax
authorities have filed an appeal against this
judgment in the Supreme Court.
I&B Ministry sources told indiantelevision.com
that CASBAA has also protested the rise in
royalty under the Finance Act 2013 from 10
per cent to 25 per cent as it is not reasonable
in view of the competitive margins earned by
the industry players. The Association wants the
Minister to roll back this increase so that the
tax rates are made ‘friendlier’ and both the
operators and consumers can benefit from a
rational tax regime.
It is stated that a majority of the Double
Taxation Avoidance Agreements (DTAA) that
India has entered into provide for a tax rate
(on gross basis) on royalties and fees or
technical services of 10 per cent.
Thus, taking a holistic view from the point of
alignment with the DTAAs and internationally
accepted tax rates, the rate of 25 per cent is
highly unjust and implies that FSOs are earning
high revenues from India which is not the
case.
Furthermore, any such step to increase tax
rates is not right as the matter is sub judice in
the Supreme Court. It not only makes the
services ‘cost ineffective’ but hits the ultimate
Indian end consumers.
Slaughter points out that India's participation
in the global network of satellite
communication is growing and any such move
by the Indian Government to tax FSOs may
also drive policy-makers of other nations to
adopt similar measures for taxing payments
flowing into India from foreign jurisdictions. http://www.indiantelevision.com/sat...royalty-on-foreign-satellite-operators-140709
