Archive for the ‘F & A Outsourcing’ Category
Impact of Indian 2010-11 Budget on US companies
On May 24, 2010 in F & A Outsourcing, Tax Revenues
- General Performance of India:
Year 2009 had been a global economic slowdown in most of the advanced countries except for few developing countries like India which estimates a GDP growth for the Fiscal Year 2009-10 to be 7.20%, up 50 basis points from the previous year with biggest credit going to Manufacturing sector. India was successful in retaining its Foreign Direct Investment (FDI) at the same level as in the earlier period in spite of global slowdown. India is aggressively aiming to cross the ‘double digit growth barrier’ and target for 9-10% GDP growth rate in 2010-11. Thus it becomes important for US and other global companies to know about the policies or tax changes that can affect business with India.
- Major Highlights Of India Budget That Impacts Global Stakeholders:
The new provision enables small businesses with a net operating loss in 2008 or 2009 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. Small businesses with large losses may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns
1. Foreign Direct Investment :
a) Complete liberalization of pricing and payment of technology transfer fee, trademark, brand name and royalty payments. These payments can now be made under the automatic route.
b) Attempt is made to consolidate all the prior regulations and guidelines into one comprehensive document. This would enhance clarity.
2. Exports and Software Export Zone (SEZ):
a) Indian Government has proposed interest subvention of 2%, where they bear a part of the interest burden, to ease the woes of the exporters on account of unanticipated and steep Indian currency appreciation against the USD..
3. Technology Sector:
a) Minimum alternative tax (MAT) has been raised from 15% to 18% for fiscal year 2010-11
b) Tax holidays for Software Technology Parks in India which is coming to an end in March 2011 is not extended in this Budget. Top Indian IT companies like Tata Consultancy Services(TCS) expects their effective tax rate to go up by 19% from current 15% due to non extension of tax holidays.
c) NASCOM lowered its forecast by 7-8% for India’s software and services exports for 2010/11 to $56-57 billion.
4. Direct Tax Reform:
a) Research and Development- Weighted deductions on approved in-house R&D facility is proposed to increase from 150% to 200% and approved contribution made to scientific research associations has increased from 125% to 175%.
b) All business with revenues exceeding $125K are required to audit their accounts. Yes, even a small business needs to get audited.
c) Converting small companies to LLP will not attract capital gain tax.
d) It is proposed that income by way of interest, royalty or fees for technical services of a non resident shall continue to be deemed to accrue or arise in India as long as the services are utilized in India even if the nonresident has not rendered services in India.
5. Service Tax:
a) Process of refund of accumulated credit to exporters of services especially in the area of Information Technology and Business Process Outsourcing made easy.
Latest and Hottest
Delhi High Court recently held that the obligation to withhold taxes on the money transferred to Non Resident arises only if the payment is taxable in India contrary to other High Court ruling which requires mandatory withholding of taxes on all foreign payments unless an exemption is received. This decision is obviously welcomed by the corporate world but we are yet to see what Supreme Court final ruling says!!!.
For more guidance or assistance with international tax strategy, please contact : neetika@accelero-corp.com..
NEW BUZZ- BPU not BPO anymore!
On March 03, 2010 in F & A Outsourcing
As I was browsing, I came across a very interesting article headlined-
Plug N Play Model in Finance and Accounting Outsourcing
Why cannot Companies go to an accounting service provider and ask them to provide the full accounting division for them – not just people, but technology and also process! Outsourcing companies can leverage on their expertise, experience and can provide the full turnkey solution which clients would love to embrace. Again, this package called BPU (Business Process Utility) is based on Unit transaction pricing mechanism- The more resources you use, the more you pay the fees thus allowing companies to move away from “Fixed” price to “Variable” price and ensure more flexibility, predictability and scalability in the rapidly changing current economic environment!
Best Industry practices with best people, best technology and best know how!
Come in the accounting shop- Plug your laptop, feed in the standard inputs and walk away with the well defined standard outputs!!
This is indeed KOOL!
Be an Entrepreneur, not an Accountant!
On December 29, 2009 in F & A Outsourcing
Business entities need to redirect their full energy towards core competencies and strategic decisions such as business development, research, sales and marketing etc. In our opinion, the biggest advantage of outsourcing is not saving money but saving time! Lot of times, entrepreneur end up spending their valuable time in managing daily operations, accounting hassles, inquiries, compliances and even more complex functions such as FP&A, Board and management reporting, due diligence etc. which are essential functions but sadly not the revenue generators!!
The power of outsourcing, if used diligently, can lead into time and cost efficiencies, process improvements, technology optimization, scalability hiring best talents, exercising industry best practices, focusing more on strategic and high end management issues and many more value additions!
Research have showed the average cost saving from outsourcing is anywhere from 35% – 50% which can be a big number for a CFO who is dealing with budget constraints.
Document storage, filing and retrieval has never been less important and especially in the paperless environmental friendly atmosphere and this function has also been successfully handled by service providers.
It is very interesting to see how FAO has evolved in last couple years and the increasing number of companies trying to find out if the kind of solution that fits for them.
For more details visit www.accelero-corp.com
Some interesting facts on outsourcing
On December 14, 2009 in F & A Outsourcing
Outsourcing entered the business world in the 1980s and since late 1990s FA outsourcing has evolved a long way and has spread its wings on practically every aspect of a finance and accounting! Now it has become a question of “What” and “When” to outsource rather than “should we outsource?”
In today’s more mature marketplace, the customer no longer seeks only reduced costs but also more complete business solutions, including process improvements and efficiencies achieved through the expertise of the service providing partner.
Today, businesses leverage by joining hands together and by realizing that the key to success is “Specialization” and leave non core activities for other partners who are specialized too!
Some interesting facts:
-The global market for outsourcing finance and accounting functions is expected to grow at a 9.6% compounded annual growth rate (CAGR), and top $47.6 billion in 2008.
-Processing services, business advisory services, financial compliance are expected to serve as the most effective leads into FA BPO arrangements.
- Accounts payable and accounts receivable remains the most widely outsourced FA function
Accelero Thought-
Just because almost everybody and anybody is undertaking outsourcing for their business does not mean that you will also need to undergo the process. Have the outsourcing company carefully examine the various factors of your business and determine if undergoing this process will actually reap benefit in long run!
For more details visit www.accelero-corp.com
Our insights in Finance and Accounting industry!
On December 08, 2009 in F & A Outsourcing
-Neetika Maheshwari, Accelero Corporation
Is Outsourcing, a strategy only for big players?
Business, regardless of their size, need to account for every little expense or income as something which seems small right now may make a big difference in the long run. Would’nt it be great to see the accountant of the company carrying the commitment of a founder and is willing to work long passionate hours, willing to take risks, willing to even forego rewards now for the sake of long term success! I have seen outsourcing companies providing the same kind of commitment as they associate themselves right from the conception to maturity!
Ledgers, journals, reports etc. may seem quite overwhelming and intimidating tasks for a business that has just begun its operations. Outsourcing is not restricted to medium –big size companies and even small entities can benefit by delegating these grueling tasks to an outside service provider who are more specialized and experienced. This action would also take off the burden from corporate to maintain the accounts correctly as a business cannot afford to have mistakes in the financial records, no matter how small!
Thus, one of the qualities that businesses should be looking for in an outsourcing partner is the degree of flexibility. They should be open to new ideas, new processes, new technology. Their schedule should match up with company’s in terms of filings, deadlines etc. Companies should evaluate thoroughly what can be outsourced and to what extent so that company enjoy the advantage and the same time not lose the control.
Hiring professional right from the beginning helps in saving lot of future costs which could be a result of minor mistakes in record keeping. For e.g. companies can save lot of audit costs, due diligence towards loan, investment or other strategic arrangements, Government penalties and fees etc.
For more details visit www.accelero-corp.com