MNC liaison offices may get tax breather

January 27, 2009
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1 min read

A ruling that the liaison office of home furnishing multinational Ikea is not liable to pay income tax in India could set an important precedent and benefit for foreign retailers, which have set up similar operations to oversee sourcing of goods from India.

In a recent decision, the Authority for Advance Rulings (AAR) said that the liaison office of Ikea Trading (Hong Kong) does not earn any income in India because its activities are confined to the purchase of goods that are exported by Indian vendors to the company or its nominees.

“Ikea does not effect any sales in India and, thus, no income accrues or arises in India,

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