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Indian Grand Prix in trouble?


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#101 hansmann

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Posted 04 August 2013 - 08:38

First know the basics of taxation. I am beginning to think that I am discussing with someone for whom taxation is a very abstract concept. Countries where you earn income always have the first right to levy tax on you. The residing countries come next. That's why many residing countries deduce the income that was already taxed at the income generating country. Any country has a right to levy tax on income being generated from their country. If this is wrong, this would have been settled by an international court, long time back. There is nothing wrong with levying income tax at the place of generation.


To the best of my knowledge, this is not how it works in the majority of developed countries .

India has tax agreements with many other nations to avoid double taxation of foreigners ; those agreements usually exempt foreign individuals and companies from local taxation - if they are non-residential .
A specific work visa might be required, sometimes proof of residence and tax registration in a foreign country will do; but in general, only the country of residence will and can claim taxes, according to the terms of the common international tax treaties .

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#102 SpaMaster

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Posted 04 August 2013 - 09:20

^ In US, while filing tax as resident, the forms ask for the amount of income for which you have already paid tax at any income-generating foreign countries. If only the country of residence can claim tax, why would US have this provision?

#103 Amphicar

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Posted 04 August 2013 - 10:17

^ In US, while filing tax as resident, the forms ask for the amount of income for which you have already paid tax at any income-generating foreign countries. If only the country of residence can claim tax, why would US have this provision?

For one thing, the USA does not have tax treaties with every country in the world - not with Cuba, Iran or Saudi Arabia for example. For another, many countries (including the USA) treat people who spend more than a fixed number of days in that country as residents for tax purposes. It is therefore possible to be classed as a resident in more than one country for tax purposes - so many treaties include a "tie-breaker" to decide where tax should be paid. Most tax treaties include "de minimis" provisions to prevent the taxation of residents of one country by the other country where the time spent working in the other country is very short. Tax treaties also commonly provide special provisions to exempt or limit the tax liability of entertainers and athletes of one country who earn income in the other country.

#104 SpaMaster

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Posted 04 August 2013 - 10:33

If there are clear-cut treaties by the countries of all these F1 entities with India, there won't be this issue at all, isn't it? The bottom line is there is common rule on how someone should be taxed. That's why many countries have the provision to have the amount already taxed at the country of income generation as deduction. Anyway, this should not matter to the F1 drivers and team. They are going to be taxed in one place or the other. It doesn't matter to them whether their tax goes to India or Britain. If they have double taxation problem, it is not a fault of one single country and they should raise the issue with both countries. Ultimately the intention is they don't want to pay tax anywhere. It just doesn't make business sense for them. So let's not project as if it was a mistake of India to tax these people. It is the local law, there is nothing wrong or unethical about it. If that's the case, they should have no problem in bringing India to an international court of law or arbitration unit. In reality, it is not about India being unfair, it is just that these guys just want to make more money, but just don't criticize as if it is the mistake of the local administration. You take it or leave it.

Edited by SpaMaster, 04 August 2013 - 10:33.


#105 Amphicar

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Posted 04 August 2013 - 11:32

If there are clear-cut treaties by the countries of all these F1 entities with India, there won't be this issue at all, isn't it? The bottom line is there is common rule on how someone should be taxed. That's why many countries have the provision to have the amount already taxed at the country of income generation as deduction. Anyway, this should not matter to the F1 drivers and team. They are going to be taxed in one place or the other. It doesn't matter to them whether their tax goes to India or Britain. If they have double taxation problem, it is not a fault of one single country and they should raise the issue with both countries. Ultimately the intention is they don't want to pay tax anywhere. It just doesn't make business sense for them. So let's not project as if it was a mistake of India to tax these people. It is the local law, there is nothing wrong or unethical about it. If that's the case, they should have no problem in bringing India to an international court of law or arbitration unit. In reality, it is not about India being unfair, it is just that these guys just want to make more money, but just don't criticize as if it is the mistake of the local administration. You take it or leave it.

The last few posts have been talking about taxation of the income of individuals, which is relatively straightforward. I strongly suspect that Bernie Ecclestone's beef with the Indian Government is more about corporate taxation in relation to the teams and suppliers and (especially) The Formula One Group. Corporate taxation is a lot more complex and although it is also subject to international treaties, as the British Government discovered in relation to Google, there are lots of highly paid lawyers advising multi-national companies how to minimize their exposure to tax. Perhaps Bernie should do a Google search: avoiding Indian taxes.

It is also rather simplistic to say"They are going to be taxed in one place or the other. It doesn't matter to them whether their tax goes to India or Britain." It certainly does matter if the tax rate in one country is much higher than in the other. That is why most top F1 drivers no longer live in their home countries but in low-tax havens like Monaco and Switzerland. There is nothing new in this - Jim Clark was a tax exile back in the 1960s.

#106 SpaMaster

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Posted 04 August 2013 - 12:06

^ Yes, I agree. Hence I ask if we should feel sorry for such people and criticize the Indian Government's tax regulations? There was a sense of criticism of Indian Government on daring to tax these darlings and how it is wrong. That's why I wanted to step in and ask what's wrong with it?

#107 Talisman

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Posted 04 August 2013 - 12:32

^ Yes, I agree. Hence I ask if we should feel sorry for such people and criticize the Indian Government's tax regulations? There was a sense of criticism of Indian Government on daring to tax these darlings and how it is wrong. That's why I wanted to step in and ask what's wrong with it?


I think the feeling of persecution is yours only. Most people on this thread were pointing out the obvious consequences of making things difficult for f1 when there are plenty of other countries in line for races, the sport will simply go elsewhere which it has now clearly done.

#108 Talisman

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Posted 04 August 2013 - 12:38

The last few posts have been talking about taxation of the income of individuals, which is relatively straightforward. I strongly suspect that Bernie Ecclestone's beef with the Indian Government is more about corporate taxation in relation to the teams and suppliers and (especially) The Formula One Group. Corporate taxation is a lot more complex and although it is also subject to international treaties, as the British Government discovered in relation to Google, there are lots of highly paid lawyers advising multi-national companies how to minimize their exposure to tax. Perhaps Bernie should do a Google search: avoiding Indian taxes.


If anything google and Starbucks are following in Bernie's path, as far as I am aware F1 is one of the most tax efficient sports in the world that puts them to shame. Ultimately for instance while Starbucks uk is running a consistent loss that is only though transferring profits to Starbucks Switzerland as other European subsidiaries do in the form of licencing fees and paying inflated prices for Starbucks branded coffee beans imported into Europe solely through the Swiss subsidiary, meaning they are still liable to Swiss taxation.

#109 hansmann

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Posted 04 August 2013 - 12:51

^ In US, while filing tax as resident, the forms ask for the amount of income for which you have already paid tax at any income-generating foreign countries. If only the country of residence can claim tax, why would US have this provision?


Most countries have this provision .
In your case, it's for US citizens who have resident status abroad, or are foreigners with a residential visa for the US, similar to or being a green card .

Country of residence (usually citizenship) always comes first re. taxation ; it only gets more complicated when you have residential status in a foreign country , or don't have your papers in order, or if you cheat .

As for F1, I don't really know the details about India's tax treaties with all the countries involved .
However, they do have them; and I assume the Indian authorities simply collect taxes from everyone involved, and demand paperwork to claim a refund afterwards .
Which isn't uncommon - but what do you think are your chances to actually get a tax refund from a country like India ?

That's the elephant in the room; the whole thing is a bribery scheme , legal considerations don't come into play here .
Once the money is paid, it will never be paid back .
The cost of making business in 3rd world countries, and it seems the price is too steep for F1 .

#110 SpaMaster

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Posted 04 August 2013 - 12:55

I think the feeling of persecution is yours only. Most people on this thread were pointing out the obvious consequences of making things difficult for f1 when there are plenty of other countries in line for races, the sport will simply go elsewhere which it has now clearly done.

India never stood in line for races. F1 came, they were not that welcome, they can leave. I have already clearly said many times that India is not desperate for F1 and was never in any line for it. Feeling of elitism is what would feel feeling of persecution in someone else. Each to their own.

#111 BRG

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Posted 04 August 2013 - 20:21

India never stood in line for races. F1 came, they were not that welcome, they can leave. I have already clearly said many times that India is not desperate for F1 and was never in any line for it.

So we are all in agreement and all happy to see the back of the Indian GP.

/thread

#112 JazH

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Posted 05 August 2013 - 11:02

F1 will do well in India if it stays.

We have had and do have Indian drivers, an Indian team, and Indian owners. India loves cars, anyone who says otherwise simply doesn't know the country that well.

The only reason that the Indian F1 is likely to be scrapped is because Sochi is far more convenient, less taxed and supported by Moscow and local government. The politics of India is far more complicated, where the federal government and local state government is completely at odds.

#113 vas04614

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Posted 05 August 2013 - 11:08

F1 will do well in India if it stays.

We have had and do have Indian drivers, an Indian team, and Indian owners. India loves cars, anyone who says otherwise simply doesn't know the country that well.

The only reason that the Indian F1 is likely to be scrapped is because Sochi is far more convenient, less taxed and supported by Moscow and local government. The politics of India is far more complicated, where the federal government and local state government is completely at odds.

:up:

#114 F1ultimate

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Posted 05 August 2013 - 11:41

I love driving around the circuit in F1 2012. It's truly an enjoyable circuit to drive through. Section 2 and 3 are fluid like Spa. However it's not a spectator circuit. It doesn't play host to exciting driving on the telly. Along with Korea is its one of those circuits organised to serve the egos of select business men who want F1 on their CV despite limited local interest. Us Brits moan about the cost of attending the British Grand Prix, imagine how the Indian citizens look upon the prices of attending a GP in their home country. I doubt most don't even have access to a TV channel broadcasting F1.

Edited by F1ultimate, 05 August 2013 - 11:42.


#115 packapoo

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Posted 06 August 2013 - 04:43

So we are all in agreement and all happy to see the back of the Indian GP.

/thread


Works for me.

#116 JazH

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Posted 07 August 2013 - 08:43

Works for me.


:lol: Only on atlasf1 would you ever find a F1 fan denying 1 billion+ people the opportunity to watch F1 live. This isn't Europe, the nearest GP, if not in India would be about 1300 miles away (not including dodgy flight routes). This would the the equivalent of UK fans having to go to Budapest for their local F1.

#117 BRG

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Posted 07 August 2013 - 11:56

:lol: Only on atlasf1 would you ever find a F1 fan denying 1 billion+ people the opportunity to watch F1 live. This isn't Europe, the nearest GP, if not in India would be about 1300 miles away (not including dodgy flight routes). This would the the equivalent of UK fans having to go to Budapest for their local F1.

But they're not interested. And their democratically elected government is apparently dead set on killing off the GP.

Anyway, 98% of that 1 billion population can't afford it and anyway don't live close enough to go (India is a huge country) and the other 2% aren't really bothered.

#118 wj_gibson

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Posted 07 August 2013 - 12:06

:lol: Only on atlasf1 would you ever find a F1 fan denying 1 billion+ people the opportunity to watch F1 live. This isn't Europe, the nearest GP, if not in India would be about 1300 miles away (not including dodgy flight routes). This would the the equivalent of UK fans having to go to Budapest for their local F1.


I find these sorts of argument (which imply some sort of prejudice against non-European people) completely unhelpful, simply as they are utterly spurious and groundless. And serve to shut down proper debate.

#119 August

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Posted 07 August 2013 - 12:19

India never stood in line for races. F1 came, they were not that welcome, they can leave. I have already clearly said many times that India is not desperate for F1 and was never in any line for it. Feeling of elitism is what would feel feeling of persecution in someone else. Each to their own.


One think I like in the Indian GP is that it's not one of those goverment-backed races to promote the country.

F1 will do well in India if it stays.

We have had and do have Indian drivers, an Indian team, and Indian owners. India loves cars, anyone who says otherwise simply doesn't know the country that well.


For that reason I feel Indian GP could be the biggest success of the Asian races (excl. Japanese GP).

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#120 JazH

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Posted 07 August 2013 - 12:45

I find these sorts of argument (which imply some sort of prejudice against non-European people) completely unhelpful, simply as they are utterly spurious and groundless. And serve to shut down proper debate.


I am an European, but it's very European dominated to have 1 (sometimes 2) Spanish races, 1 in Budapest, 1 In Austria, 1 in Belgium, 1 in Italy, 1 MC, 1 UK, 1 Germany. You can get to most of these places in a 1-2 hr flight direct from most of Europe.

Formula 1 is a worldwide sport, with a European heritage. But travel in Europe is now a lot easier and convenient. It's not a growth market for Formula 1. It needs to start targeting growth economies, it might be difficult, but the potential is much bigger. Abandoning F1 in India is like telling Jaguar and Range Rover to stop selling it's cars in India and China there because of tax problems. It's a ridiculously short-sighted strategy.

Whilst it's been argued in this thread that rich Indian businessmen are interested in the Indian GP. This is incorrect. The vast majority of people who attend the GP are middle-class Indians (who have digital sports channels and can afford the tickets). And frankly, F1 has never been a cheap sport to attend and follow (*cough* Monte Carlo).

Edited by JazH, 07 August 2013 - 12:47.


#121 Alfisti

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Posted 07 August 2013 - 13:25

I like the IDEA of a race in india but as per usual with near third world countries, dealing with the government is a right nightmare. The Commonwealth games was an absolute fiasco of the highest order.

#122 SpaMaster

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Posted 07 August 2013 - 16:25

One think I like in the Indian GP is that it's not one of those goverment-backed races to promote the country.



For that reason I feel Indian GP could be the biggest success of the Asian races (excl. Japanese GP).

Exactly. There is a huge potential. And as the previous poster says, Indians love cars. It may not translate to F1 love right now. But I have personally seen people have the DNA in them to have that taste. But never except it to be sponsored by the Government. It will never happen. So will the tax breaks. They will never get tax breaks either. But if they persist it could be the biggest success of the Asian races (excl. Japan of course) and a rare sustainable one. If they are smart, they would know it is a long-term prospect and would have to work very differently than looking at the local government as a cash-cow.