Cash Repatriation from India

Cash repatriation from India

Call date: 2nd June 2020

Members shared their experiences in repatriating cash from India, including, Dividends, management Fees, Royalties, Intercompany netting, domestic pooling and Mauritius structures.

The call was chaired by Damian Glendinning, whose commentary appears below.

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Chairman’s commentary

India has always been a difficult and highly regulated environment. However, over the past few years, a lot of treasury actions which used to be very difficult are now possible. The country continues to have one of the region’s more aggressive tax regimes – they are particularly focused on transfer pricing – and there are still many regulations which are not always clear, and change regularly, but still have to be complied with.

  • Dividends are the preferred way of repatriating cash from India. Withholding tax applies, so there is a cost, and there are regulations to be complied with (capitalisation, audits and tax payments). But the process does work.
  • Two participants used management fees and royalties to remit cash out of the country. Again, prior approval is required, and the process is not simple.
  • A couple of participants have used intercompany loans. Same story: an onerous prior approval process.
  • Intercompany netting: gross in, gross out, is possible. One participant was centralising all cross border activities into a single entity within the country before netting, and using a non resident rupee account.
  • Domestic cash pooling: mixed experiences, but it is possible No cross border cash pooling.
  • Legal structure: one company was structured locally as a LLP (Limited Liability Partnership), while another had looked at it and decided against it, due to opposition from local management. It was not clear what the benefits or disadvantages were – this was driven by Tax.
  • Mauritius: several participants have structures which route flows through Mauritius, to take advantage of the beneficial tax agreements. These work well.

Bottom line: everything in India takes time, and involves processes which are difficult and time consuming. But, if you put in the time and effort, things will generally work.

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