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Japan team to take up tax issues

Our Bureau

NEW DELHI, Oct. 29

THE visiting Japanese economic mission is set to press for an early resolution of pending income-tax disputes and may also seek certain modifications to the existing Double Taxation Avoidance Agreement (DTAA) to strengthen the economic ties between the t wo countries.

Irritants, according to Japanese businessmen, in the existing DTAA like the 20 per cent withholding tax that is applicable on software trade between the two countries may once again be brought to the notice of the top brass of the Finance Ministry during their official level interactions.

Japanese businessmen have, during their earlier visits, said that such a level of withholding tax was forcing Japan to look at other countries, including China, to source their software requirements.

Sources said that the controversial issue of imposition of penalties by Indian tax authorities on short deduction of tax at source on certain perquisites and emoluments earned by Japanese employees rendering services in India are likely to figure during their parleys with the officials of the Finance Ministry.

Various business delegations, during their visits here this year, have also held that Japanese investments into India have not been very high mainly on account of frequent policy changes and retrospective application of rules by the Indian Government.

Some of them even reckoned that ``unreasonable tax measures'' had been initiated against Japanese corporations operating in India.

In fact, the Japanese Prime Minister, Mr Yoshiro Mori, had during his visit to India in August, expressed confidence that the interactions of the economic mission would not only help in solving ``traditional problems'' relating to trade and investment bu t also in finding new fields of cooperation including that of information technology.

Besides, the Chairman of the Japan-India Business Cooperation Committee, Mr N. Kawamoto, the high-level Economic Mission will comprise senior executives from top Japanese corporates including Itochu Corp, Marubeni Corporation, Mitsui & Co and Sony Corpor ation.