Both the high growth economies continue to have challenges in catching up with business changes and providing consistent and predictable tax regimes.
“Respondents think that the complexity, consistency and predictability of the Chinese Mainland and Indian tax regimes would play a significant role when it came to determining their investment decisions here,” the global consulting firm said in its ‘2014 Asia Pacific Tax Complexity Survey’.
“Tax audits are very frequent in the region and respondents were not optimistic in their ability to get a favourable resolution through the administrative resolution procedures,” it said.
Indonesia will also become one of the complex tax regimes in the region, it added.
On India, the survey found that consistency was the most important issue to deal with when making business decisions.
“There is significant desire to be seen as socially responsible taxpayers as a result of which, there is a concern for reputational risk and an inclination not to engage in tax planning that may be perceived to be aggressive,” it said.
Deloitte said 81 per cent respondents noted that the tax regime had become more complex in India, while over half (54 per cent) believed that it had become markedly less consistent over the last three years.
“India is on the upper end of the pool when looking at tax audit rigour. Seen as the least consistent tax jurisdiction … Respondents highlighted the need to speed up tax audits.”
Survey said 88 per cent of the respondents believed that India would be one of the most complex tax jurisdictions in the next three years and is one of the top three countries likely to witness material change over the same period.
In India, investors’ greater focus would be on spending more time on tax management over the next 3 years, it said.
About 55 per cent of the respondents with business in India said they have plans to implement tax-risk management systems sometime over the next three years, it said.