Comments on Indian expert committee report on retrospective amendments: October 19, 2012.

On October 19, 2012, Tax Executives Institute filed the following letter with the Indian Government generally praising its expert committee report on retrospective tax legislation for recognizing that such legislation should be enacted only in exceptional cases and for recommending that the new indirect stock transfer tax be narrowed and applied prospectively. The letter was prepared under the aegis of TEI's European DirectTax Committee, whose chair is Anna Theeuwes of Shell International B.V. Benjamin R. Shreck, TEI Tax Counsel, coordinated the preparation of the letter.

On behalf of Tax Executives Institute, Inc., I am writing to comment on the "Draft Report on Retrospective Amendments Relating to Indirect Transfer," released on October 9th by the Expert Committee chaired by Dr. Parthasarathi Shome (Report).

Tax Executives Institute (TEI) was founded in 1944 to serve the needs of in-house tax professionals. With 7,000 members worldwide, today the Institute has 55 chapters in Asia, Europe, and North America, and represents 3,000 of the largest companies around the globe. As the preeminent association of in-house tax professionals worldwide, TEI has a significant interest in promoting fair tax laws and policies at all levels of government across the globe.

Because certainty is critical to business decision-making, TEI has a particular interest in legislation that would upset the settled expectations of taxpayers. Thus, earlier this year TEI submitted a letter to Indian government officials opposing certain tax aspects of Finance Bill 2012. (1) Of particular concern to the 3,000 companies represented by TEI's members were the retrospective aspects of the legislation and, in particular, the provisions that would retroactively overturn a series of recent rulings and judgments by the courts of India, including the Supreme Court. In TEI's view, retroactive legislation should only be enacted in extreme and abusive situations and should generally not be embraced simply to increase a country's tax base. Be cause retroactive legislation robs taxpayers of certainty in respect of the application of already complex tax provisions, we regret that it could adversely affect the willingness of businesses to commence or continue operations in India (or any other country).

For these reasons, TEI is pleased that the Report takes a strong stand against retrospective tax legislation generally, noting that it is justified only in "exceptional or rarest of rare...