The government will not change tax laws to please multinational companies (MNCs), some of which have threatened to pull out of India in wake of multi-billion dollar tax disputes.
"There is a sense that some MNCs are trying to push the country into a corner. They are complaining about the tax system; many of those who are complaining are routinely ordered to pay fines by the tax authorities in other countries. They do not threaten to pull out of those countries. So, why should India be any different?" a top government official told HT.
However, sources said that the government would not take any knee-jerk action on such issues or mails. "We don't want to overreact, companies can react and present a point of view, they are free to do so, as we are a democracy," the official said.
The official admitted that there are a few issues relating to approvals, among other things, which need to be addressed. "We are constantly meeting investors and wherever and whenever we believe that the process needs to be made more friendly, we try and immediately address the issue," explained an official.
After the keenly watched Vodafone tax dispute, Indian tax authorities had, in March this year, slapped a `2,000 crore tax demand on Nokia - the Finnish telecom major. Earlier other multinational firms such as Cadbury and Royal Dutch Shell were also embroiled in similar tax disputes with the Indian authorities. In all these cases, the companies have vehemently denied any wrongdoing.
"Nokia reiterates that it operates with transparency in its business transactions, and is committed to resolving its outstanding issues with Indian tax authorities in accordance with all applicable laws, while also ready to defend ourselves vigorously as needed," Nokia said in a statement defending its case.