PVR and INOX announce a blockbuster merger

PVR and INOX a blockbuster merger

PVR and INOX announce a blockbuster merger, to become a combined entity that will be headed by Ajay Bijli (owner and chairman of PVR).

PVR and INOX announce a blockbuster merger to tackle the threat of growing OTT Content. With the OTT onslaught of the theatre business, the aims of theatre owners have risen to an extent that they want to dominate the multiplex market, as the combined entity is assured to have a market share of 50% with a box office share of 42% for Hindi and English content.

But with a higher ambition comes higher scrutiny! This deal will be subject to regulatory and shareholder approval.

From a shareholder’s point of view –

Imp – In this stock deal, for every 10 shares of INOX, the shareholders will receive 3 shares of PVR. Not a bad deal!

Governance Structure –

The structure looks clean, governance wise, as Pavan Kumar Jain (chairman of INOX) will take the seat of a non-executive director with INOX promoters having a 16.66% stake in the combined entity, and Sanjeev Kumar (Joint MD at PVR) being the executive director with PVR promoters having 10.62%.

From a regulatory standpoint –

The combined entity is poised to become the largest film exhibition company in India. CCI is the first one to eye over such a merger, where the entity is set to make multiplex a two-player market.

Cinepolis, the third-largest multiplex chain in India, will become less than one-third of the merged company.

But, here’s a catch! This merger won’t require CCI’s #approval as it is below the threshold of Rs 1,000 cr. This number could have been much higher if there was no pandemic. But the point is maybe we would have never seen a merger if the situation would have been normal.

The market sentiment –

The shareholders have no reason to be upset as this synergy will ramp up the EBIDTA by Rs 150 cr (Rs 90 cr from ads & Rs 60 cr from convenience fee).

The multiplex business derives revenues from two main sources:
~Ad Revenue (INOX’s is at a 33% discount than PVR, per screen wise).
~Convenience Fee (INOX’s is 50% lower than PVR).

This deal can be weighed as if it’s a merger of Amazon Prime with Netflix! Hence, it will be very interesting to see if the regulators take into consideration the present case of bad revenues or keep in mind the real dominance of these top two players.

This deal can be weighed as if it’s a merger of Amazon Prime with Netflix –

Hence, it will be very interesting to see if the regulators take into consideration the present case of bad revenues or keep in mind the real dominance of these top two players.

Taxation System in UAE – An Overview

UAE Taxation System – Analysis

The United Arab Emirates is a federation of seven emirates, with autonomous emirates and local governments. The UAE’s openness to international business and strategic location adds an extra advantage to the region.

History of Taxes in UAE – Taxation System in UAE

At present, there are no tax laws that apply to individuals in the UAE.

However, the Federal Tax Authority does issue tax Residence Certificates to individuals who satisfy the requirements specified by the Authority to take advantage of DTAA. The UAE has entered into a 115 DTA agreement with its trade partner.

Income Tax and Corporate Taxes in UAE – Taxation System in UAE

The Income-tax decrees have been issued in five of the seven Emirates in UAE, being–Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah, but they are not currently enforced on most businesses. Hence, resulting in no corporate taxation in most industries. 

However, the UAE levies the corporate tax on oil and gas exploration and production companies. Also, the branches of foreign banks are subject to income tax under separate banking tax decrees in certain Emirates (E.g. Dubai, Abu Dhabi).

Excise Duty / Tax

The excise tax was also introduced across the UAE in 2017. The Federal Tax Authority in UAE pointed out that the application of Excise Tax laws achieved remarkable success since their implementation, reflecting positive results primarily in the accelerated pace of building a safe and healthy society by reducing the consumption of harmful goods.

Custom Duty in UAE –

UAE is a hub for international trade hence, Customs Duty plays an important role. A customs duty of 5%–is imposed on the cost, insurance, and freight (CIF) of the value of imports. Other rates may apply to certain goods, such as alcohol and tobacco, and certain exemptions and reliefs may also be available.

The United Arab Emirates is part of the GCC Customs Union, which was established in 2003 to remove customs and trade barriers among the GCC member states.

Most significant tax reform – VAT

The year 2018 had been major for the UAE taxation system. It was the year when Value Added Tax impacted the country in a whole new way.

Understanding VAT – Most Significant Tax in UAE

The UAE government implemented a value-added tax (VAT) in the country from January 1, 2018, at a standard rate of 5%.

VAT has provided the UAE with a new source of income. It has also aided the government is moving toward its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.

VAT applies equally to tax-registered businesses managed on the UAE mainland and in the free zones. However, if the UAE Cabinet defines a certain free zone as a ‘designated zone, it must be treated as outside the UAE for tax purposes. The transfer of goods between designated zones is tax-free for certain transactions.

There are basically three categories of VAT Rates in UAE–When the tax treatment of financial services, residential buildings (subject to conditions), bare land, and local passenger transport services are exempt; there is another big list under the zero-rated category. The export of goods, export of services, export of telecommunication services, certain means of transport, international transportation of services for passengers and goods, residential buildings (Subject to conditions), Education Services, and healthcare services. All other supplies which are not exempt or zero rates are subject to a VAT Standard Rate of 5%.

Criteria for VAT Registration

If a person is a resident in the UAE, he would be required to get registered for VAT mandatorily if the total value of their taxable supplies and imports made within the UAE exceeds the Mandatory Registration Threshold of AED 375,000 over the previous 12-month period or if the person anticipates that the total value of their taxable supplies or imports will exceed AED 375,000 in the next 30 days.

There is also an option for businesses to get registered for UAE VAT Voluntarily if, at the end of any month, the total value of the person’s taxable supplies and imports or their expenses that were subject to VAT, in the previous 12 months exceeds the Voluntary Registration Threshold of AED 187,500 or the total value of the person’s taxable supplies and imports or their expenses which are subject to VAT, in the next 30 days is expected to exceed the Voluntary Registration Threshold of AED 187,500.

Filing of Returns under VAT

Taxable businesses must file VAT returns with FTA on a regular basis and usually within 28 days of the end of the ‘tax period’, as defined for each type of business. The standard tax period in UAE is quarterly for businesses with an annual turnover below AED150 million and monthly for businesses with an annual turnover of AED150 million or more. The FTA may, at its choice, assign a different tax period for certain types of businesses.

SOME KEY FEATURES OF UAE VAT

Foreign Business Refunds

The Federal Tax Authority (FTA) allows foreign companies to claim back Value Added Tax (VAT) incurred while doing business in the UAE.

To be eligible for the VAT refund, the first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-Implementing GCC States that fully comply with the provisions of the Common VAT Agreement of the Cooperation Council for the Arab States of the Gulf. Such foreign businesses must not be Taxable Persons in the UAE. They must also be registered as an establishment with a competent authority in the jurisdiction in which they are established. And finally, they must be from a country that implements VAT and that equally provides VAT refunds to UAE businesses in similar circumstances.

UAE Designated Free Zones

UAE has specified areas termed “Free Zones”, which are considered different from the UAE Main Land.

Historically, Free Zones have been excluded from the territorial scope of the UAE. However, for VAT purposes, this is not automatically the case. Only those Free Zones listed in a Cabinet Decision qualify for special VAT treatment and that special VAT treatment has certain limitations. These nominated Free Zones are known as Designated Zones for VAT purposes. 

The effect for businesses operating in Designated Zones will be that many supplies of goods will be outside the scope of UAE VAT, subject to strict criteria and detailed record keeping. However, supplies of services are subject to the normal UAE VAT rules.

VAT Refund for tourists:

VAT refunds for tourists are carried out through a fully integrated electronic system that connects retailers registered in the ‘Tax Refund for Tourists Scheme’ with all ports of entry and exit from the UAE.

“Planet” is the exclusive operator of the tax refund system for tourists, which the Federal Tax Authority executes in the UAE. The tourist, however, should have met certain conditions laid by the authority specifically to claim the VAT Refund.

Tourists will receive their refunds through a special device placed at the departure port–airport, seaport, or border port–by submitting the tax invoices for their purchases from the outlets registered in the Scheme, along with copies of their passport and credit card.

Once these documents are submitted, tourists can either recover the VAT in cash in UAE dirhams or have it transferred to their credit card.

VAT IN The Gulf Cooperation Council

When VAT in UAE is getting big and better with each passing day, let’s also see where is UAE and other GCC Countries standing.

The Kingdom of Saudi Arabia has seen a leap in the VAT rate from 5% to 15%. The increase came as a part of additional measures taken by the country in response to the economic impact of the Covid-19 crisis.

Bahrain, having implemented VAT with effect from 1st January 2019, is continuing to issue new sector and topic-specific VAT guidance, to provide support and clarity to businesses operating in the state. Qatar imposes no VAT or sales tax on operations in Qatar.

However, the introduction of VAT in Qatar under a common GCC framework is expected to be introduced in the near future with an anticipated tax rate of 5%. The tax authorities in Kuwait recently announced that it will finally introduce Value Added Tax (VAT) at 5% from 1 April 2021.

Oman is set to be the fourth GCC state to implement VAT since the signing of the GCC VAT Agreement at the end of 2016, with an effective date of 16 April 2021. The Oman VAT Law was published in the official gazette on 18 October 2020. This triggered a 180-day countdown to the effective date of 16 April 2021.

The wait is over – TCS Buyback Details

TCS Buyback Details, Day 1 Update, Day 2 Update –

TCS Buyback –

  • ⦁ Buyback Window Opens: 09 March.
  • ⦁ Buyback Window Closes: 23 March Settlement.
  • ⦁ Amount Credit Date: 01 April.
  • ⦁ Retail Entitlement Ratio: 6 Shares against 45 Shares (13.33%).
  • ⦁ Expected Retail Acceptance Ratio: 22 – 27%.

Day 1 Summary, Window to close on 23 March –

  • ⦁ Retail Reservation: 60,00,000 Shares.
  • ⦁ Small Shareholders on Record Date: 21,10,824.
  • ⦁ Shares Tendered in Individual Category on Day 1 – 9,10,255.
  • ⦁ Shares Number of Bids Received on Day 1 – 22,496.

Day 2 Summary, Window closes on 23 March (Expected AR – 25%) –

Limited Liability Partnership (Second Amendment) Rules, 2022

Limited Liability Partnership (Second Amendment) Rules, 2022 – MCA Notifies

The Ministry of Corporate Affairs (MCA) vide its Notification dated 04th March 2022 has notified Limited Liability Partnership (Second Amendment) Rules, 2022 to amend the existing Limited Liability Partnership Rules, 2009, which shall come into force on the date of its publication in the Official Gazette.

Read Notification From Below –

G.S.R. . (E).–In exercise of the powers conferred by sub-sections (1) and (2) of section 79 of the Limited Liability Partnership Act, 2008 (6 of 2009), the Central Government hereby makes the following rules further to amend the Limited Liability Partnership Rules, 2009, namely:–

1. Short title and commencement. –

(1) These rules may be called the Limited Liability Partnership (Second Amendment) Rules, 2022. Limited.

(2) They shall come into force from the date of its publication in the Official Gazette. 2. In the Limited Liability Partnership Rules, 2009 (hereinafter referred to as the said rules), in rule 11,-

(a) in sub-rule (1), in the second proviso, for the word “two’, the word “five” shall be substituted;

(b) in sub-rule (3), after the word and figures “Form 16.”, the following words shall be inserted, namely:- “and shall mention Permanent Account Number and Tax Deduction Account Number issued by the Income Tax Department’.

In rule 19 of the said rules, for sub-rule (4), the following sub-rule shall be substituted, namely:-

” (4) The person making the application shall attach a copy of the incorporation certificate of the limited liability partnership or the company or the registration certification of the entity, as the case may be.”.

4. In rule 24 of the said rules, for sub-rule (6) of, the following sub-rule shall be substituted, namely:-

“(6) Statement of Account and Solvency shall be signed on behalf of the limited liability partnership by its designated partners. Where the corporate insolvency resolution process has been initiated against the limited liability partnership under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) or the Limited Liability Partnership Act, 2008 (06 of 2009) has come under liquidation under the said Code, 2016 or the said Act, 2008, the said Statement of Account and Solvency may be signed on behalf of limited liability partnership by interim resolution professional or resolution professional, or liquidator or limited liability partnership administrator. “.

5. In rule 25 of the said rules, for sub-rule (2) of, the following proviso, shall be inserted, namely:-

‘ Provided that where the corporate insolvency resolution process has been initiated against the limited liability partnership under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) or the Limited Liability Partnership Act, 2008 (06 of 2009) having turnover up to five crore rupees during the corresponding financial year or contribution up to fifty lakh rupees has come under liquidation under the said Code, 2016 or the said Act, 2008, the said annual return may be signed on behalf of limited liability partnership by interim resolution professional or resolution professional, or liquidator or limited liability partnership administrator and no certification by a designated partner shall be required?

6. In rule 34 of the said rules,-

  • (a) in sub-rule (3), in clause (ii), in sub-clause (c), for the word and figures ‘Form 29’, the word and figures “Form 28” shall be substituted;
  • (b) in sub-rule (8), for the word and figures “Form 29”, the word and figures “Form 28′ shall be substituted;

7. In rule 36 of the said rules, in sub-rule (6), after the word, brackets, and figure “sub-rule (7)”, the words and figures In Form 32′. shall be inserted; 8. In rule 37 of the said rules, in sub-rule (1A), in clause (II), for the words and figures “enclose along with Form 24′, the words and figures “furnish in Form 24” shall be substituted.

8. In rule 37 of the said rules, in sub-rule (1A), in clause (II), for the words and figures “enclose along with Form 24′, the words and figures “furnish in Form 24” shall be substituted.

Download Complete Notification

Effect of the notification in simple language-

Limited Liability Partnership (Second Amendment) Rules, 202

 1. There can be 5 Designated partners (without having DIN) at the time of Incorporation. (Earlier 2 was allowed)

 2. LLP Formation Process became web-based, just like the SPICE Forms for company formation.

 3. Director’s Details can be fetched from Digi Locker Database.

 4. PAN TAN of LLP will be available along with LLP Incorporation similar to the company.

 5. All Forms of LLP have now become web-based.

 6. Each and every change in LLP Deed will have to be marked in Form 3 with precise information.

 7. Web-Based Form 9 Consent of Partners is implemented. Resultantly, all Designated Partners Digital Signatures will be required.

 8. Place of maintenance of accounts other than Registered Office – Form 12 is notified.

Address:

Akhil Amit And Associates – Income Tax, GST, Audit, FEMA, Company Law, Finance & RERA Consultancy

A8, First Floor, Om Sai Market, Above Cotton King, Near Sane Chowk, Krishna Nagar, Chikhali Akurdi Road, Chinchwad,
Pimpri Chinchwad
Pune, Maharashtra 411019

Phone: 

+91 098231 20925

Fax: 

+91 089189 00780

Email: 

office@akhilamitassociates.com