global buss models- a'bad pres

Nishith Desai Associates ©Legal and Tax Counseling Worldwide

5th IFA Conference on International Taxation & Transfer Pricing, Ahemadabad

GLOBAL BUSINESS MODELSGLOBAL BUSINESS MODELS

International Tax Challenges & OpportunitiesInternational Tax Challenges & Opportunities

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What is a “Business Model”?What is a “Business Model”?

What is a “Business Model”?

“A business model is a conceptual tool that contains a big set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams.”

— Osterwalder, Pigneur and Tucci (2005)

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WHAT IS A BUSINESS MODEL?WHAT IS A BUSINESS MODEL?

• The subscription business model• The razor and blades business model

(bait and hook) • The pyramid scheme business model• The multi-level marketing business

model• The network effects business model • The monopolistic business model • The cutting out the middleman

model • The auction business model• The online auction business model• The bricks and clicks business model

• The loyalty business models • The Collective business models• The industrialization of services

business model• The servitization of products

business model • The low-cost carrier business model• The online content business model • The freemium business model• The premium business model• The direct sales model• The professional open-source model• Various distribution business

models

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Types Of Business ModelsTypes Of Business Models

• The eComTaxpert Report studied 28 business models relating to the E-Commerce industry

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Types Of Business ModelsTypes Of Business Models

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

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E-COMMERCE BUSINESS MODELSE-COMMERCE BUSINESS MODELS

Globalization is sourcing from where a product is cheapest and selling where it is dearest

But taxation can distort this equation

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Global Business & Tax IssuesGlobal Business & Tax Issues

International Tax Issues

Harmonization of different legal and tax systems; and

Creating the most tax efficient structure

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Global Business & Tax IssuesGlobal Business & Tax Issues

LawTax

Strategy

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Global business & Tax IssuesGlobal business & Tax Issues

LawTax

Strategy

Public International

Law

Public International

Law

Legal System of Intermediate Country

Private International

Law

Legal System of Investor CountryLegal System of Investor Country

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Global Business & Tax IssuesGlobal Business & Tax Issues

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Strategy CircleStrategy Circle

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Investment StructureOutbound - Equity

Investment StructureOutbound - Equity

Host Country

HoldCo2 HoldCo1

Holding Company

India Company

Corporate Laws

Tax

ExchangeControls

Direct investment

Investment through Holding Company

Investment through 2-Tier Holding Structure

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Investment StructureOutbound InstrumentInvestment StructureOutbound Instrument

Host Country India

Equity

Debt

Hybrid Instruments

Corporate Laws

Tax

ExchangeControls

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Where & How To Hold Intellectual Property?

Where & How To Hold Intellectual Property?

Indian Pharmaceutical

Company

Intellectual Property

Investing in USA-Whether LLC or Inc.?

Investing in USA-Whether LLC or Inc.?

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India US LLC

Business

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Investing in USA-Whether LLC or Inc.?

Investing in USA-Whether LLC or Inc.?

IndiaUS Inc.

US LLC.

Local US Investors

Can a foreign company merge into and Indian company?

Does foreign law permit corporate migration?

What are the implications?

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Cross-Border M&ACross-Border M&A

oDomestic Taxation is an ObligationoForeign Taxation is a Cost

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CHALLENGES AND OPPORTUNITIESCHALLENGES AND OPPORTUNITIES

If not planned right, taxation by multiple jurisdictions may magnify this cost manifold However, if planned right, these costs can disappear!

CURRENT CHALLENGES:– The Theory of Nexus & Extra-Territorial

Intervention– Transfer of Intellectual Property– OECD Model Guidelines in light of

advent of Technology

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International Tax ChallengesInternational Tax Challenges

CASES:– Ishikawajima-Harima Heavy Industries Ltd.– Hyundai Heavy Industries Co. Ltd.– Morgan Stanley– SET Satellite

SUB-JUDICE CONTROVERSIES: – Genpact– Vodafone

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International Tax controversiesInternational Tax controversies

FRACTURING A TRANSACTION NUMBER OF STRUCTURING POSSIBILITIES:

– Holding Companies for Investments & Capital Gains

– Jurisdictions to hold IP for License & Royalty– System Arbitrage– Hybrid Instruments– Hybrid Entities– Migration of Companies– Triangular Situations

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International Tax OpportunitiesInternational Tax Opportunities

International Tax Challenges & Opportunities

International Tax Challenges & Opportunities

Double (or Multiple) Taxation v. Double Non-Taxation Tax Avoidance v. Tax Evasion Tax Havens v. Tax Havens Tax Treaty Situations v. Non-Treaty Situations Physical Commerce v. E- Commerce Pure Breed Instruments v. Hybrid Instruments Pure Breed Entities v. Hybrid Entities Mutual Agreement Procedure v. Arbitration Residents v. Non-Residents Branch v. Subsidiary Capital Gains v. Business Income Transfer of Tangibles v. Transfer of Intangibles Triangular Situations v. Treaty Shopping Permanent Establishment v. Permanent Establishment ……………. And the list

could go on….

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Thank Younishith@nishithdesai.com

Thank Younishith@nishithdesai.com

Nishith Desai AssociatesLegal and Tax Counselling Worldwide

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