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Union Cabinet approves MoU between India and UK to support Ease of Doing Business in India

The Union Cabinet has given its approval to Memorandum of Understanding (MoU) between India and United Kingdom (UK) to support Ease of Doing Business in India.

The MoU was signed between both countries earlier in November 2016 during the official state visit of UK Prime Minister Theresa May to India.

Key Facts
  • The MoU will facilitate exchange Government officials from both countries to facilitate sharing of best practises, technical assistance and enhanced implementation of reforms.
  • The beneficiaries include the officials from India will include Central Government Ministries / Departments and State Governments.
  • It will facilitate various agencies of UK government to offer professional courses on capacity-building of frontline inspectors, better regulation drafting for officials, sharing of best practises, etc.
  • The collaboration is expected to expedite adoption of innovative practises by the India leading to easing of regulatory environment in country and fostering of conducive business climate in India.
Background

Currently, India is ranks 130th out of 190 economies in Ease of Doing Business (EoDB) as per Doing Business Report, 2017. On the other hand UK has achieved phenomenal improvement in EoDB rankings in recent years.

MoU for Cooperation in the Field of Intellectual Property

The Union Cabinet also approved to the MoU between India and UK for Cooperation in the Field of Intellectual Property (IP) signed in November 2016.  The MoU seeks to facilitate establishment of wide-ranging and flexible mechanisms for cooperation in the development of automation, new documentation and information systems in the field of IP.  It provides an opportunity for collaboration in training programmes, exchange of experts and technical exchanges and outreach activities. Its implementation will enhance capacity of the Office of Controller General of Patents, Designs & Trademarks (CGPDTM) to examine patent applications, which in turn will impact innovation positively.

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India and UK sign three Bilateral Advance Pricing Agreements  

The Central Board of Direct Taxes (CBDT) signed three Bilateral Advance Pricing Agreements (APAs) with the Competent Authority of United Kingdom (UK) to reduce tax litigation.

Earlier both countries had exchanged mutual agreements amongst them under the Mutual Agreement Procedure (MAP) Article of the India-UK Double Taxation Avoidance Convention (DTAC). With this, CBDT so far has entered into 111 APAs.

These three APAs cover international transactions in the nature of payment of intra-group service charges and pertain to the telecom industry. They also have a roll-back provision.

What is Advance Pricing Agreement (APA) Programme?

  • The APA Programme was introduced by Finance Act, 2012 with a view to provide a predictable and non-adversarial tax regime and to reduce litigation in Indian transfer pricing arena. Rollback of APAs was announced in the Budget in July 2014.
  • An APA is usually signed between taxpayer and central tax authority on an appropriating transfer pricing methodology for determining the value of assets and taxes on intra-group overseas transactions. An APA can be entered into for a maximum of 5 years at a time.
  • It seeks to introduce certainty in tax law by reducing compliance costs and make tax regime investment friendly.
  • It provides certainty to taxpayers regarding transfer pricing that aim to avoid disputes between taxpayer and tax regulator.

What are benefits of APAs?

  • Boost to economy and ease of doing business.
  • Provide alternative path to the investors with rollback provision to reduce litigation
  • Strengthen Government’s mission of fostering a non-adversarial tax regime.

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India, UK ink two MoUs

India and the United Kingdom have signed two memorandum of understanding (MoUs) to boost relations between the two nations.

These MoUs were signed during the official three days state visit of UK Prime Minister Theresa May to India. It was her first bilateral visit outside Europe after becoming PM and after UK’s decision to exit from European Union.

Signed MoUs are

MoU on Ease of Doing Business

  • Under it, expertise from UK Government will be made available to relevant departments and agencies of the Indian Government for the ease of doing business drive.
  • It includes sharing of best practices and technical assistance, exchange between the officials to India for effective implementation of the initiatives in order improve its ranking in the ease of doing business.
  • Important areas of cooperation include tax administration, regulatory regimes, support to businesses and startups, competition economics, etc.

MoU for cooperation in the field of intellectual property

It was signed between the Department of Industrial Policy and Promotion (DIPP) and the Intellectual Property Office (IPO) of UK.

  • It envisages establishing a mechanism for furthering cooperation between the IP Offices of India and UK in the field of IP and related information technology (IT) services.
  • It includes exchange of experience, best practices and knowledge of IP awareness among the public, businesses, industry, R&D organizations and educational institutions.
  • It also includes exchange of processes for disposal of applications for trademarks, patents, industrial designs and geographical indications.

Both countries also agreed to establish new Joint Working Group (JWG) to discuss and resolve trade related issues. It will focus on goods trade and also on services, including through greater mobility for skilled professionals.

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