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REWIND: International Business News #11

Posted on January 4th, 2011 | Author: admin

  • Finance officials in India are currently examining whether Kraft Foods (United States) avoided tax obligations during its takeover of Cadbury (United Kingdom) for $19 billion last year. The world’s largest food and confectionary corporation allegedly evaded taxes related to the sale of shares, which reportedly had an extensive affect on the Indian economy. Last year, a public interest lawsuit was filed in Delhi under income tax laws, which treat brands, goodwill, market share and franchise as capital assets and are therefore, taxable. In addition, Vodafone (United Kingdom) is appealing a two billion dollar judgment from an Indian court that alleged the British company’s multibillion dollar takeover of India’s largest cellphone company evaded capital gain taxes
  • The New Year certainly appears positive for Facebook (headquartered in Palo Alto, California), as Goldman Sachs Group Inc. (New York) and Digital Sky Technologies (Russia) invested $450 million and $50 million respectively in the social network. The substantial investment will allow the social network to increase its employee base, enhance services and improve worldwide competitiveness. Moreover, the new deal caused the company’s valuation to soar to $50 billion.
  • Following four years of negotiations, the European Union and India are one step closer to signing an extensive free trade deal. Principally, the deal looks to simplify the flow of commerce and reduce taxes on products by up to 90 percent (%). India is now seen as a leader in the emerging markets arena, in addition to boasting high annual growth rates. Notably, last year, $52 billion was recorded in trade and investment between the EU and India.
  • Another bleak result was reported for the European Union (EU) in the mergers and acquisitions (M&A) market, as it measured a mere 29 percent on the global mergers scale. Indicative of the current state of the European Union and weakening EU currency, it has been over a decade since the EU represented such a small portion of M&A worldwide market. Interestingly, Britain, who is not a party to the EU’s single currency arrangement, contributed to one quarter of the EU’s total M&A figure alone.
  • In an effort to improve traffic congestion in Beijing, China, the government has implemented a new quota system restricting the number of licenses to be issued each year. Since 1986, Shanghai has capped the number of automobiles on its roads by restricting the number of new car licenses. Automobile stocks fell in Hong Kong as tax subsidies on small cars were increased and rural subsidies were eliminated. In 2009, the Chinese auto market exceeded the United States (U.S.) market, however, it is predicted the current measures may see China fall behind again.
  • Lastly, an interesting article, Private Equity Looks Abroad, But May Be Blind to the Risks, comparing the risks facing private equity firms in the United States and abroad, highlighting key differences in profits, taxes, regulations, laws, restrictions on ownership and currency.

Compiled and summarized by Muireann O’Keeffe.