A US-based Private Equity Backed Company in India sought our expertise in the reorganization of their group holding structure to alleviate additional compliance costs and repatriation costs. The Indian Company has a subsidiary in the USA which resulted in unwarranted compliance costs and therefore, the management has decided to liquidate the US subsidiary in order to align with the group’s objectives and mitigate unwarranted compliance costs. Our primary objective centred around delivering comprehensive solutions and strategic guidance to facilitate the consolidation and reconfiguration of the group’s organizational structure. Our Analysis encompassed intricate elements of tax cost, regulatory compliance, foreign exchange restrictions, and other nuanced legal intricacies.
Among the array of challenges we encountered, the following stand out:
Navigating Cross-Jurisdictional Regulations: Given the cross-border nature of the group’s activities, our engagement demanded an exhaustive analysis of both Indian and US regulatory laws. The complexity of the group’s cross-border activities necessitated an exhaustive dissection of Indian and US regulatory frameworks.
Tax Cost: A simple transfer of shares would have resulted in tax outflow from India/US perspective without any real gains to the group. Therefore, our approach entailed the following analysis to arrive at the best option:
- Evaluation of various possible options permissible under both US and India regulations.
- Simulation of cost of restructuring under various options which included – Federal Tax Cost and State Tax costs in USA, Indian Income-tax Act and other state levies from both India and US perspective.
- Detailed Implementation mechanics along with preparation strategies for ensuring seamless execution.
Our prowess in navigating intricate overseas regulations, coupled with sophisticated tax simulation enabled us to provide holistic solutions.
