FAIR-MARKET VALUE FORMULA FOR INDIRECT SHARE TRANSFERS NOT FAIR: EXPERTS

Tax consultants and experts are seeing various irritants in the draft rules on calculation of fair market value (FMV) for indirect share transfers. Although the draft adds some certainty to taxation of Vodafone-like transactions, these flaws could lead to anomalies, they say. One of the issues is the definition of the term ‘book value of liabilities’. The draft prescribes the manner in which FMV of the foreign target company (FTC) shares and the underlying India company (IC) shares can be determined for the purpose of indirect transfer taxation. Any transaction where the ...