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Keep Indian workers out of tax net, France urged

Keep Indian workers out of tax net, France urged
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First Published: Mon, Apr 02 2007. 12 27 AM IST
Updated: Mon, Apr 02 2007. 12 27 AM IST
France has agreed to consider a proposal from India which exempts Indian professionals employed in the country from social security payments if the duration of their stay is less than two years.
Currently, Indian professionals in France have to make these payments out of their salaries irrespective of the duration of the stay. Social security costs in France are high: employees pay 20% or more of their gross salary towards social security in some cases. Much of this funds the public health-care system inthe country.
India wants to enter into a social security exemption agreement (SSEA) to help Indian professionals in France avoid paying the tax. “The SSEA is a concept similar to the totalization agreement that we want with the US. Our suggestion is that since (these) professionals do not stay long enough to enjoy the social security benefits, they should either be exempt from the levy or be refunded the amount when they leave the country. Exempting the payment of social security will help French companies to save on costs since they now have to factor this in when hiring Indian professionals,” said a senior official at the commerce ministry who did not wish to be identified.
France does have a system of dealing with professionals and workers who are nationals of other countries and do not stay in the country for very long. However, this is done by allowing “the social security to be transferred or exported,” said the official, who added that since “India does not have a similar (social security) system, this will not work.”
India had first raised the issue during a bilateral trade meeting in December 2006, following which it fowarded France the details of a similar social security agreement it had entered into with Belgium for the same purpose. The issue was again discussed at a meeting between visiting French trade minister Christine Lagarde and commerce and industry minister Kamal Nath on 30 March.
“The French have sought information regarding our social security system. The nodal ministry dealing with this issue, the ministry for overseas affairs, will respond to these queries,” the official said.
France also raised the issue of allowing its lawyers to provide advisory services to their foreign clients in India. “They have suggested the setting up of a working group for opening up of legal services. We have agreed to consider this,” the official said. The official pointed out that Indian law does not distinguish between advisory services and advocacy services.
“The French do not want permission to practise here; they want to be allowed to offer advice to foreign companies operating in India,” he said, adding that the government was facing opposition from the Bar Council of India over opening up of legal services to foreign firms.
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First Published: Mon, Apr 02 2007. 12 27 AM IST
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