Tax Decision Goes Against Subex

Subex, the Indian business assurance vendor, received bad news when the Karnataka High Court upheld a decision to remove tax exemptions previously given to businesses operating in the country’s Special Economic Zones (SEZs). The court dismissed Subex’s petition in the process of making its judgement. For more, see here. The effect of the tax change is reported to be the…

…imposition of 18.5 per cent minimum alternate tax (MAT) on the book profits of SEZ units with effect from April 1, 2011, besides imposing dividend distribution tax with effect from June 1, 2011.

Indian business taxes are fiendishly complicated, and the interpretation and application of Indian tax law is notoriously unpredictable, as has been highlighted by a string major tax cases, including cases that involved telecoms giants Vodafone and Nokia. An earlier survey showed the imposition of MAT on SEZs has made India less attractive as an investment destination. This ruling adds to Subex’s tax woes, who are separately disputing demands for USD6.6mn in back taxes and related penalties.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Director of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.