Tax Authorities Eye GSK-HUL Merger: Could Attract Tax on Long-Term Capital Gains and Brand Transfer

Volume 6 No 2    |    Read Article

By Sanjay Sanghvi and Raghav Kumar Bajaj (guest authors)

GSK Consumer Healthcare India (GSK India) is in the process of merging with Hindustan Unilever Ltd (HUL) in the biggest deal in India’s consumer packaged goods space, valued at approximately $4.5 billion. Although the transaction is structured to be tax-free for shareholders, plenty of room exists for the Indian tax authorities to assert tax from the companies: The transfer of a brand owned outside India may generate Indian tax to the extent its value stems principally from India. In addition, arm’s length pricing for royalty payments and accompanying withholding tax issues also come into play. Sanjay Sanghvi and Raghav Kumar Bajaj of Khaitan & Co., Mumbai and New Delhi, discuss the global tax issues surrounding the transaction.   See more →