Group Tax- Initial Rundown/ Putting in order
In any group, some of the companies are highly profitable and some of the companies may be in losses. As the corporate tax regime allows for offsetting of the losses and transfer of the assets or businesses of group companies without any tax, the structuring must be commenced now.
While each company in the group has special features, it would be advisable to immediately start reviewing the corporate ownership, present operational performance, and long-term business plans. The following measures are advised to be reviewed at this point in time:
The management must consider the increase or decrease in level of the shareholding if they wish to retain or exclude a company from the group.
To offset the losses, estimating present profitability level and expected operational performance in the coming years will be helpful in effective tax planning.
If some assets or liabilities are proposed to be transferred within the group companies or some investments are to be included or segregated from a company to another company or a natural person, this is the right time to undertake that exercise.
It would be a great idea to get all the accounts completed for the past years and audited, so that after the introduction of Corporate tax, transactions of past periods do not affect the computation of income of taxable years, giving rise to disputes.
This is an important area to be continuously reviewed henceforth.