Nirmala Sitharaman: India’s corp tax cut a strong signal to investors: PwC Exec

New Delhi: India’s move to cut the corporate tax rate sends a strong signal to global investors that it is serious and open for business, said Colm Kelly, global tax and legal services leader at PwC.

“India has always been on the agenda for foreign investors because of the scale of access to market and business opportunity it represents…It (corporate tax rate cut) does two things. It improves return on investment, and I think it sends a very strong signal to investors, about India being serious, about being open for investment and for business,” Kelly told ET in an interview.

In September, FM Nirmala Sitharaman cut the corporate tax rate to 22% minus exemptions and tax holidays, from 30% earlier.

Kelly said the rate cut improved one key factor that investors take into account before making investments. The government now needs to put in place a better dispute resolution mechanism to provide certainty to investors, he added. “We need to have strong dispute resolution mechanisms in place…getting prior certainty on certain positions for investors is also important,” he said.

The government is trying to bring in some structural measures, such as Advance Pricing Agreements to give certainty, but there is a need for continuous work on that front, he said.

Asked about the growing clamour to reduce personal income tax rates, Kelly said it was not uncommon for personal tax levels to be relatively higher around the world. “…Even when countries are reducing their corporate tax rates, they need to retain the ability to raise money to support public investment,” he said.