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Tax Havens in Trouble as MNCs Rejig Global Ops

Several multinationals have begun evaluation of their existing organizational structures as many countries will start initiating their own domestic tax measures in line with the global minimum corporate tax regime that comes into effect in 2023.

Some of the top multinationals have roped in global tax advisors and could go for a massive overhaul of global organizational structures, said people with direct knowledge.

Tax havens such as Ireland, Luxemburg, Mauritius and Cayman Islands were used by companies to make investment across the globe or hold patents to reduce their tax outgo.

“Many tech and pharma multinationals that would house their IPs (intellectual properties) and investment SPVs (special purpose vehicles) in countries such as Ireland, Luxemburg, and Switzerland are now re-looking at options as many countries will start initiating their own domestic tax measures, including GAAR (general anti avoidance rule), “said Uday Ved, partner at tax advisory firm KNAV.

Take an Indian unicorn as an instance. The Company is looking to foray in Europe and wanted to set up an SPV in Ireland for tax purposes. The tech startup’s tax advisors have advised against that as it may not serve any purpose as far as saving tax is concerned, said a person aware of the development. S-ET

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