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Uncovering Growth Opportunities in Emerging Markets

Uncovering Growth Opportunities in Emerging Markets
26 Apr 2012
The BRIC have seen phenomenal growth as multinationals have rushed to invest and expand into emerging markets. These countries present many tax opportunities which should not be overlooked as companies seek to close deals.

This topic was discussed today at the global conference for Taxand, the world's largest organisation of tax advisors to multinational businesses.

In Brazil, deal structures, taxation of sale and reorganisation are all conditions which can be finalised before deals are closed, significantly reducing the risks in the transaction. Companies can also be structured to benefit from existing tax treaties as well as reduced taxation of 15%, rather than the standard rate of 25%.

The situation is also similar in China where tax liabilities are identified and become pre-conditions before the deal is constructed, again mitigating the expected risks. China also offers a number of incentive policies to encourage foreign investment within certain sectors such as technology.

In India they are facing an evolution of the tax policy, balancing a number of priorities for both the government and investor. Governments are looking to raise revenues through new taxes whereas investors are seeking certainty in legislation and efficient administration. The country is also embarking on significant changes in the form of information exchange agreements between authorities.

Multinationals looking to operate regional hubs in India can benefit from pre-transaction restructuring - both domestic and offshore- on a tax free basis. Multinationals need to look to all forms of planning such as share buy-back - a very popular scheme in India - or capital gains concessions, providing it is a listed company on the stock exchange.

Emerging markets hold many investment and expansion opportunities for multinationals, but tax authorities are maturing to the level of their counterparts in developed economies at an ever increasing pace. Multinationals must therefore treat emerging markets with the same respect at those of the developed world.

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For further information please contact:
Abigail Tarren, COO
T. +44 (0)207715 5243

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