Pragadheesh
In the zone
American firms could see a 50% rise in the cost of outsourcing business processes to India if President Barack Obama's new tax
proposals are accepted. Even though outsourcing will still make business sense, industry watchers concede the move could act as a dampener.
Obama has proposed to tax expenditure by US companies on availing services from outside the country from 2011. The move has been proposed to discourage outsourcing and contain the flight of jobs to other countries.
He said the White House plan would save taxpayers USD 210 billion over the next decade. “It's a tax code that says you should pay lower taxes if you create a job in Bangalore, than if you create one in Buffalo, New York.”
Payments by US companies for services outsourced to India or other countries are treated as normal expenditure and deducted from the company's revenue at present. They are not required to pay tax on that amount.
Incentives would, instead, be given to those creating jobs and enhancing competitiveness in the US. The end of tax incentives for outsourcing would have a huge impact on the Indian economy, where US companies have been outsourcing their work.
further info:
*timesofindia.indiatimes.com/Busine...p-outsourcing-cost-50/articleshow/4488704.cms
*www.moneycontrol.com/india/news/economy/concernedobamas-bangalore-or-buffalo-call-nasscom/396182
proposals are accepted. Even though outsourcing will still make business sense, industry watchers concede the move could act as a dampener.
Obama has proposed to tax expenditure by US companies on availing services from outside the country from 2011. The move has been proposed to discourage outsourcing and contain the flight of jobs to other countries.
He said the White House plan would save taxpayers USD 210 billion over the next decade. “It's a tax code that says you should pay lower taxes if you create a job in Bangalore, than if you create one in Buffalo, New York.”
Payments by US companies for services outsourced to India or other countries are treated as normal expenditure and deducted from the company's revenue at present. They are not required to pay tax on that amount.
Incentives would, instead, be given to those creating jobs and enhancing competitiveness in the US. The end of tax incentives for outsourcing would have a huge impact on the Indian economy, where US companies have been outsourcing their work.
further info:
*timesofindia.indiatimes.com/Busine...p-outsourcing-cost-50/articleshow/4488704.cms
*www.moneycontrol.com/india/news/economy/concernedobamas-bangalore-or-buffalo-call-nasscom/396182
