Obama's new tax proposals to make outsourcing difficult
US President Barack Obama has unveiled new proposals to end tax breaks for American companies that shipped jobs overseas to countries like India.
During the campaign he talked about this issue saying that he would plug the loopholes in the countries tax code that encourages outsourcing. Obama said, "You would have to pay more tax if you create a job in Bangalore in India than if you create a job here in Buffalo, New York."
Announcing the international tax policy reform Obama announced a set of proposals to crack down on illegal overseas tax evasion, close loopholes, and make it more profitable for companies to create jobs in the US.
The new tax laws are expected to hit countries like India, China and Philippines, where US companies have been outsourcing their work.
Nearly 60 per cent of Indian IT-Business Process Outsourcing industry caters to US companies. Indian IT companies described these measures as "protectionist" and a retrograde step.
The Federation of Indian Chambers of Commerce and Industry (FICCI) said it will hurt US companies.
FICCI President Harsh Pati Singhania said while Obama's move would have some impact on the US investment abroad and into India, in the long run this would only run counter to the interest of US corporations seeking global presence.
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