India is set to demand a review of provisions of capital gains taxation when it meets Mauritius in December second week to renegotiate the Double Tax Avoidance Agreement (DTAA) that was signed way back in 1983.
Under the DTAA, capital gains on sale of assets in India by companies registered in Mauritius can only be taxed in Mauritius. While short-term capital gains are taxed at 10 per cent in India, they are exempt in Mauritius. So, such companies escape paying taxes in both countries.
Revenue department officials claim that the treaty is being misused for round tripping. Here, an investor exploits the tax advantages offered by a country (zero capital gains tax in Mauritius) with which India has a DTAA, takes money out of India and finally brings it back disguised as foreign investment.
The officials, however, said Mauritius "may not agree with our proposals" without a fight.
The final agenda drawn by the revenue department is being vetted by the ministry of external affairs. The move comes amidst the flak the government has been drawing from all quarters including the civil society, Opposition political parties and the Supreme Court over its alleged inaction on curbing black money generation and bringing it back from bank accounts in foreign jurisdictions.
Earlier, India and Mauritius had agreed to review the operations of a Joint Working Group set up in 2006 to strengthen the mechanism for exchange of information under the India-Mauritius tax treaty, besides putting in place adequate safeguards to prevent misuse of the DTAA.
The renegotiation will seek provisions for past information and banking information, the sources added. The tax treaty between the two nations has facilitated huge foreign investment in the country. Many venture capitalists have structured investments in India, taking advantage of the benefits provided by the treaty.
It is to be noted that Mauritius tops the list of countries brining in foreign direct investment in India. According to the Department of Industrial Policy and Promotion, bulk of the FDI inflows into the country between April, 2000 and January, 2011 has happened via Mauritius-based companies. During this period, FDI from Mauritius stood at Rs 2,69,395 crore or 41 per cent of the total FDI inflows into India.
Earlier, Finance Minister Pranab Mukherjee had said India is constructively engaged with Mauritius to update the existing DTAA convention in line with international practices.
So far, as many as 81 tax treaties with foreign countries have been amended to enable better flow of financial information and 14 tax information exchange agreements signed.
Ballooning Natural Gas Supply-Demand Deficit to Fuel LNG Imports: ICRA
India's natural gas supply has been adversely impacted in 2011-12 due to fall in KG D6 production to 46.6 MMSCMD in H1 2011-12 from 55.9 MMSCMD in 2010-11. KG D6 production is likely to remain at subdued levels over the next couple of years, especially in comparison to the earlier anticipated production of 60-80 MMSCMD.
Regarding domestic gas production in the medium term, Mr. K. Ravichandran, Senior Vice-President and Co-Head, Corporate Sector Ratings, ICRA stated, "Domestic natural gas supplies are expected to increase to around 153 MMSCMD by 2014-15 from 143 MMSCMD in 2010-11. The current estimate is about 22% lower than our previous estimates of 195 MMSCMD primarily due to lower KG-D6 production and delays anticipated in commissioning of KG satellite fields."
On the demand front, despite the significantly high potential across several sectors, the realisable demand for natural gas will be a function of gas supplies in the market at reasonable price, the price competitiveness of gas as compared to alternative fuels, timely commissioning of the proposed transmission pipeline infrastructure, and regulatory initiatives in the power sector. ICRA believes that demand will increase from new customers once the bottlenecks in the trunk pipeline are cleared in the near to medium term. Overall, ICRA expects gas demand to rise to around 410 MMSCMD by 2019-20 from the actual consumption of around 177 MMSCMD in 2010-11.
Commenting on increasing domestic supply-demand gap, Mr. Ravichandran mentioned "India needs to secure additional supply of LNG on a long-term basis, especially in view of less-than-anticipated domestic supply and possible shortage of LNG after a couple of years. India's reliance on LNG is expected to increase further, which will pose significant risks in a scenario of tight LNG supply demand scenario, leading to low availability and high prices of spot LNG."
As regards gas allocation and pooling, an inter-ministerial committee has recently recommended i) preferential allotment of available domestic natural gas to core sectors, that is, fertiliser and power sectors, along with a certain amount reserved for the CGD/CNG sector, ii) cap on domestic gas allocation to certain other sectors and iii) inferred gas price to be used as benchmark for domestic gas pricing. The committee has not suggested any form of pooling at the all-India level across industries but the objective has been assumed to be served by indirect pooling at the end of consumers, with price-sensitive sectors (fertiliser/power/CGD) getting a higher share of cheaper domestic gas. ICRA believes that the policy recommendations, if accepted, will provide more clarity to gas usage mix and pricing, which in turn would help companies across industries to formulate their capital expenditure plans (capex) and future requirements of natural gas.
As R-LNG is an expensive fuel as compared to domestic gas and domestic/imported coal, it is critical for a power producer to tie-up domestic gas for a large share of fuel requirements. ICRA believes that the additional demand from power (around 32 MMSCMD by 2012-13) along with lower KG D6 production pose significant fuel supply risk for gas-based power producers over the medium term. Commenting on this, Mr. Ravichandran stated "If the recommendations of the recent Inter-Ministerial Committee are accepted and implemented by the GoI, the fuel supply risk might be partly mitigated as the new power plants could get domestic gas allocation to the extent of 60-70%". ICRA expects that levellised tariff for a new gas based power plant would be competitive in comparison to those based on imported coal, if R-LNG share as percentage of total gas requirement remains about 30-40%.
Regarding the credit outlook for ICRA-rated companies in the Indian downstream natural gas sector, most of them are in the process of implementing large capex programmes, considering that the sector is viewed to have good long-term demand prospects. While the large capex is a credit concern, track record of executing projects of a similar nature, comfortable capital structure, regulated returns and steady cash flows are the mitigating factors from the credit perspective.
" The prospect of a potential recession in both the United States and Europe has recently increased, driving a sharp reduction in global risk appetite. Traditionally, a slowdown in developed countries - and
a decline in risk appetite - have had an adverse impact on emerging economies and their asset values. However, in the aftermath of the 2008 global financial crisis, many emerging countries were able to recover from the economic slowdown more quickly than developed economies, with the advent of counter-cyclical fiscal and monetary policies, as well as a dramatic increase in global liquidity. Can this
scenario be repeated?
Authored by Bunt Ghosh, Head of Emerging Market Strategy and Risk, Anja Hochberg, Head of Investment Strategy for the CIO Office and Adrian Zürcher, Emerging Market and Equity Strategist for the CIO Office, the paper discusses how emerging markets - while not immune from a potential global slowdown - may again have the capacity to successfully respond to the current market environment with similar counter-cyclical measures"
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Nokia, The world's largest cellphone maker will unveil its first phones using Microsoft software on Wednesday, hoping they will kick-start a rescue of its ailing smartphone business.
Nokia is widely expected to launch two to three new models using the software, including the Searay which was first shown in a leaked video months ago and looks very similar to its current N9 handset.
The Finnish company, left in the dust by Apple and Google in the booming smartphone market, decided to ditch its aging Symbian platform in favor of Microsoft's software in a risky deal in February that spooked investors.
Nokia has not rushed with the new phones.
Nimbler rivals HTC, Fujitsu and Samsung Electronics have beaten it with models using the latest Windows software, Mango.
Nokia and Microsoft have said they would focus on close co-operation with operators to support the platform.
"Operators really want to have another company on the scene: they don't want Google and Apple to rule the mobile universe," said Magnus Jern, chief executive of Barcelona-based mobile app development firm Golden Gekko.
Analyst Carolina Milanesi from research firm Gartner said Nokia should price its first models below those of Samsung and HTC, and then market them heavily.
"Price is going to be the key — you need to give a bit of the carrot to consumers and developers," she said.
Nokia's market value has halved since February as investors are unsure whether it can ever regain the market share it has lost.
Its third-quarter results beat low expectations, sparking hopes that the company can survive a painful revamp, but smartphone sales still dropped 38 percent from a year ago.
Nokia said last week that its first Windows phone would reach selected markets this year, but declined to say whether more than one model would be launched this week.
With Microsoft software, Nokia hopes to gain the kind of attention Apple and Google have attracted from software developers that enrich their devices.
There are some initial positive signs.
"We are seeing Windows being acknowledged as platform No 3," said Golden Gekko's Jern, adding that Microsoft and Nokia, are subsidizing app development to kick-start the new platform.
"We are working on 10 applications of which five are paid by Nokia," Jern said.
Research firm Strategy Analytics expects Microsoft to double its share of the Western European smartphone market during 2012 to 12.3 percent, helped by the Nokia partnership.
The 12.3 percent forecast for Microsoft's software refers to its use across several mobile phone makers and compares with the much higher market share Nokia's Symbian platform alone previously enjoyed — it controlled 41 percent of the West European market as recently as the first half of 2010.
The annual Nokia World media and industry event in London on Wednesday includes speakers from the world's largest carriers: China Mobile, Vodafone, Orange and MTN.
Heineken maintain its Q4 outlook as company sees strong Q3 beer sell.
The judge presiding over the spot-fixing trial has instructed the jury at a London Court on Tuesday to accept that Mohammad Amir and agent Mazhar Majeed were involved in fixing.
Former Pakistan Test captain Salman Butt and fast bowler Mohammad Asif face charges of conspiracy to cheat, and conspiracy to obtain and accept corrupt payments, following a Lord's Test in August last year when they allegedly conspired with Majeed, Amir and other people unknown to bowl pre-planned no-balls. Butt and Asif deny the charges.
The comments came as the judge began his summary of the trial at Southwark Crown Court and were the first official guidance given to the jury on Amir and Majeed. However, the judge added that their apparent guilt should not bias the fate of Butt and Asif.
"You can proceed on the basis that Majeed and Amir were involved in the spot-fixing at Lord's, as all parties agree that is the case," Justice Cooke told the jury. "But don't be concerned at their absence."
"You should return true verdicts according to the evidence. Don't let sympathy enter your verdicts and don't speculate on what you might have heard outside of this courtroom. You should base your decision on the evidence alone and draw inferences, which I mean by drawing common sense conclusions."
Earlier, Butt's lawyer Ali Bajwa completed his closing arguments, stressing that it was possible for no-balls to have been fixed without the knowledge of his client.
He suggested there was a criminal conspiracy between Majeed and Amir and possibly Asif, but insisted that Butt played no part in any spot-fixing that might have occurred.
"The prosecution doesn't want the truth to get in the way of a jolly good theory but you have to go on evidence, not suspicion. Guess work cannot play a part in your deliberations," Bajwa said.
In his closing, Asif's lawyer Alexander Milne urged the jury to "follow the money" after police failed to find any marked cash from an undercover reporter in his client's room during initial police raids.
"Where did that 150,000 Pounds (that Majeed took from the undercover reporter) go?" Milne asked the jury. "It went to Mr Butt and Mr Amir. It's up to you members of the jury what conclusions you draw from that but none of that money went to Mr Asif.
"If Majeed was that keen to pay Mr Asif, he would have found a way. If you follow the money, you will find that it does not lead to Mr Asif," Milne added.
Bringing intellectual property protectionism to a new level of absurdity, someone has applied to trademark 'Occupy Wall Street.'
From The Smoking Gun: Citing the potential of “Occupy Wall Street” to become a “global brand,” a Long Island couple has filed to trademark the name of the amorphous organization responsible for the protests and encampments in lower Manhattan and other U.S. cities, The Smoking Gun has learned. In a U.S. Patent and Trademark Office (USPTO) application, Robert and Diane Maresca are seeking to trademark the phrase “Occupy Wall St.” so that they can place it on a wide variety of goods, including bumper stickers, shirts, beach bags, footwear, umbrellas, and hobo bags.
From The Smoking Gun: Citing the potential of “Occupy Wall Street” to become a “global brand,” a Long Island couple has filed to trademark the name of the amorphous organization responsible for the protests and encampments in lower Manhattan and other U.S. cities, The Smoking Gun has learned. In a U.S. Patent and Trademark Office (USPTO) application, Robert and Diane Maresca are seeking to trademark the phrase “Occupy Wall St.” so that they can place it on a wide variety of goods, including bumper stickers, shirts, beach bags, footwear, umbrellas, and hobo bags.
MF Global Holdings Inc ( NYSE : MF ) loose as much as 47% in tuesday's trading session as company announced a second quarter loss.
MF Global (NYSE: MF) opened at $3.31. Over the last 52 weeks the stock has ranged from a low of $3.48 to a high of $9.28. The stock dove after the company reported a loss for its second quarter. Option players also flocked to the stock and volume was 24.63 times normal with 22,879 contracts changing hands. More than 71% of Tuesday's volume was in puts. Technical indicators for the stock are and S&P does not currently have a STARS rating for MF. If you are looking for a hedged play on MF the stock seems like it could be a candidate for a December out-of-the-money bear-call credit spread above the 3 range
Amazon Inc ( NASDAQ: AMZN ) was down more than 4 % in regular trading session on Tuesday and loose as much as 15 % in after hours trade. Traders and Investors are betting that company's profit is deteriorating as company announced 73 % less profit in Q3 and issued a guidance below analysts' expectations. Stock was hit hard and close after hour session at $198.89, more than 12 % down after market close.
More bearish bets have been made on this online e commerce company and might see more down side as sentiment might worsen about this particular stock.
Below is the news release:
The earnings decline was far worse than Wall Street had expected from the e-commerce giant. That — along with a weak profitability forecast for the fourth quarter — sparked a sell-off in after-hours trading that pinched about 12% from the company’s stock, which had already slipped more than 4% in the regular session to close at $227.15.
Colin Sebastian of Robert W. Baird said the fact that Amazon’s missed Wall Street’s earnings target is not new, but noted that revenue results also came in slightly below analysts’ forecasts — a change from previous quarters.
“The lack of upside in revenue combined with guidance that looks pretty conservative is going to pressure the stock for the time being,” Sebastian said in an interview.
For the period ended Sept. 30, Amazon AMZN -12.44% reported net income of $63 million, or 14 cents a share, compared to net income of $231 million, or 51 cents a share, for the same period the previous year.
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Revenue jumped 44% to $10.88 billion.
Analysts were expecting earnings of 24 cents a share on revenue of $10.95 billion for the quarter, according to consensus forecasts from FactSet Research.
The company reported operating income of $79 million for the quarter, a drop of 70% from last year’s third quarter and well below Wall Street’s forecast of $149.7 million. That put operating margin for the period at a relatively anemic 0.7%. Operating expenses jumped by 48% for the quarter.
Amazon added about 8,100 workers during the quarter, which Sebastian noted as a significant growth in the company’s headcount, which now numbers 51,300 workers.
“This fast pace of growth is costing Amazon a lot of money,” Sebastian said. “No one is going to really challenge Amazon, but the pace of their growth may be in question. In this environment, at this multiple, that’s not good enough.”
The company said Tuesday that it is adding a total of 17 fulfillment centers this year, up two from its previously disclosed plan. Fulfillment expenses soared by 65% in the third quarter, with a 74% gain in expenses related to technology and content.
For the fourth-quarter, Amazon projected a revenue range of $16.45 billion to $18.65 billion, compared to Wall Street’s forecast of $18.15 billion.
“We don’t view these results as thesis-changing,” Citi analyst Mark Mahaney wrote in an email, noting that Amazon s spending “seems clearly elective/discretionary/offensive against very large market opportunities.”
But he added that “we are surprised that the Q4 revenue guide isn’t more robust.”
The profitability line for the fourth quarter is expected to come in between an operating loss of $200 million and operating earnings of $250 million, implying a targeted operating margin range of 1.3% at the top end of the forecast. Analysts had been expecting an operating margin of 2.7% for the period.
Amazon is planning to launch its new Kindle Fire tablet in the middle of the fourth quarter. Analysts generally expect the device to boost sales, but its low price tag of $199 has some concerned that it may pressure margins even more during the crucial holiday period.
Scott Devitt of Morgan Stanley says he currently expects Amazon to sell about 2.8 million units of the tablet in the fourth-quarter. “Short of material disruption of the business model in the seasonally strongest quarter of the year, we believe the guidance is light provided the sales impact of the Kindle Fire,” he wrote in a report Tuesday afternoon. ( Source: MarketWatch )
