Fear of retrospective taxation "hangs like a Damocles' Sword" over the head of foreign firms doing business in India, Microsoft said on Wednesday -joined by two other large American corporations to raise concerns about the country's uncertain tax regime.
Highlighting their concerns, top officials of the three global giants -Microsoft, GE and Lockheed Martin -were unanimous at a conference here in seeking predictability in taxation rules to encourage investments in the country .
GE and Lockheed Martin also called for removing inefficiencies in government tendering procedures and bidding processes, while Microsoft said there was a need to overcome "trust deficit" over data security issues in India.
"Tax hangs like a Damocles' sword over our head and I'm not terribly sure whether it's only American companies but I guess it's every company in this country . That Da mocles' sword is that suddenly rules change and is retrospective," Microsoft India chairman Bhaskar Pramanik said at the ` Accelerating Indo-US Trade' conference.
He said: "If you come to me and tell me that I am going to increase your taxes by 35% I have no issues. I will change my business model accordingly but if you come back and say for the last ten years I am going to charge you 35% more, I have a problem and I can't change that. I think this retrospective tax has still not disappeared." Expressing similar sentiments, GE South Asia president Banmali Agrawala said taxation remains an issue for foreign companies, particularly American firms that "need comfort" from the Indian government.