Since Donald Trump has taken the vow of the 45th President of the United States of America, his action and new plans haven’t helped themselves to keep out of the news. Last evening, Donald Trump has announced lowering corporate tax to as low as 15% from the present 35%. The effective date of the new tax rate could be from January 1, 2018.
With its new 15 percent corporate tax nation, US will attract Indian Startups to incorporate there, to be closer to their clients and to list on a NYSE or a NASDAQ to tap the capital markets.
According to the new plan, US government will also reduce the tax on profits brought by MNCs from overseas to US shores from 35% to 10%. This will probably be the easiest route to make money from foreign investors into the companies. Capitals gains tax will also be lowered by 3.8 points to 20 %.
With this new plan, India will find hard to retain their growing tech corporations inside the home. This will lead Prime Minister Narendra Modi finding hard to stop India’s new generation of tech startups towards the Trump’s territory.
Venture Capital firms such as Accel, Bessemer, Clearstone, Matrix, Nexus Venture Partners, Sequoia Capital, and Norwest Venture Partners who heavily invests in Indian startups are registered from Port Louis.
The lowest country with the least tax rate is Mauritius with 15% for individuals and corporate sectors.
As mentioned on the website Money Control, Indian tech startups like Flipkart, Grofers, Practo, Capillary Technologies, adNear, TonBo have migrated to nearby Singapore, as the country has attractive corporate tax rate of just 17% compared to India’s 33% with zero tax on capital gains. Bigger firms like HCL and TCS have already incorporated from US years ago.
Just few days ago Prime Minister Narendra modi announced a new policy where entrepreneurs can float companies in Just once day. While wind off still remains a challenging affair.
With the lower tax rates, US government plan imposes immigration barriers in Asian countries such as India and China. Read more about India Startup Ecosystem.