Why in the news ?

• The recent U.S. tax cuts and reforms are exerting a lot of pressure globally.
• Following the U.S. tax cuts, most countries now looking at ways to enhance their tax competitiveness in order to attract investments and boost growth. According to the U.S.-India Strategic Partnership Forum (USISPF).
• The corporate tax rate was slashed to 21% from 35% after the U.S. adopted the Tax Cuts and Jobs Act in December.

More on news

• The statement assumes significance as there are expectations that the government may also usher in tax reforms in the Union Budget in line with global trends.
• Indian subsidiaries of many American companies and even Indian export firms for whom the U.S. is the major market, are said to be considering shifting operations to the U.S. to take advantage of the tax cuts and other benefits of being there.
• Every country around the world is now looking at their tax rates and how competitive they are vis­a­vis the U.S.
• Companies such as Apple and Exxon Mobil are reported to have indicated plans to invest billions of dollars in the U.S. following the tax cuts.
• Some express the concerns over the difference in India and U.S. tax rates that it would possibly lead to a slowdown in investment into India by U.S. ­based firms.
• Indian leather exporters are also weighing the option of adding production in Bangladesh to take advantage of the 15% cash support announced by that country, besides the import tariff gains of exporting from a least developed country.
• Chief Economic Advisor earlier this week had said that India will have to respond in kind to the trend of developed countries, such as the US, lowering their corporate tax rate to ensure that it remains an attractive destination for foreign capital and prevent the erosion of competitiveness of domestic companies.

Source

·The Hindu, The Mint.