American tax treaty signed by Infosys

Infosys signs U.S. tax pact

Question: Recently the American tax treaty was signed by Infosys with the U.S. Internal Revenue Service (IRS) for what amount to get tax reversal?
(a) $ 225 million
(b) $ 250 million
(c) $ 275 million
(d) $ 300 million
Answer: (a)
Related Facts:

  • On January 2, 2018; Infosys Limited signed an Advance Price Agreement (APA) with the U.S. Internal Revenue Service (IRS).
  • This agreement will be able to reverse the tax provisions of $ 225 million in the quarter ended December 31, 2017.
  • According to filing, this agreement covers (fiscal) the financial year from 2011 to 2021.
  • For the quarter ending in December from the tax reversal, the consolidated net earnings per share of Infosys will increase about to $ 0.10.
  • From the APA the future predictability of Infosys’s US operating tax obligations will increase.
  • It is important that the background of the treaty started in 2015.
  • According to the method of APA, Infosys is hopeful of reducing its overall effective tax rate to 100 basis points in the future.

Reference:
http://www.thehindu.com/todays-paper/tp-business/infosys-signs-us-tax-pact/article22408213.ece

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