Averting double tax in EPC
Appropriate structuring of EPC (engineering, procurement and construction) contracts is essential to minimise both direct and indirect tax costs, says Mr Satish Aggarwal, Partner, Ernst & Young. He suggests that the establishment of one-to-one correlations between the individual activities and the considerations payable would help minimise the possibility of double taxation, something highly undesirable especially in the context of infrastructural pr ojects such as construction of dams, power plants, urban housing facilities and other areas of national importance.
For starters, the concept of EPC is quite common in the infrastructure, real estate and industrial construction sectors. “EPC contracts include all activities ranging from initial conceptualisation and design, providing or procuring the required goods and services from various sources, to construction, installation and commissioning of the project,” explains Mr Aggarwal, in the course of a recent email interaction with Business Line.