Aberdeen Asset Management Challenges Indian Government Tax Law

When Indian Prime Minister Narendra Modi got elected in May 2014, he immediately started a string of reforms geared to encourage foreign investment and business development in India. His efforts saw immediate results as over $50 billion was pumped into the Indian economy during the last 12 months.

However things are beginning to go south as the new minimum alternative tax (MAT) imposed retrospectively on foreign fund management companies has been termed as unfair. Aberdeen Asset Management is one such company who finds the new law completely unethical and has decided to file a case in the High Court of Bombay.

Aberdeen Asset Management recently received a notice from the Income Tax department asking it to pay MAT charges of “less than $50,000″ on one of its accounts. The company has refused to pay the amount and decided to go the legal route even though it will incur a higher cost in legal fees and has no guarantee of winning the case.

In a statement, Hugh Young, the managing director for Aberdeen Asia said “We’ll probably end up spending a lot more on the legal challenge than the tax demand, but the point being that if you receive these and don’t challenge you can end up receiving a lot more.”

During the last month a number of foreign investment firms have approached the Bombay High Court and filed similar cases. Aberdeen Asset Management is currently the biggest firm to file a case against the MAT laws and has decided not to pay any MAT until a decision is made by the court.