Elon Musk's Tesla to take tax-friendly jurisdiction route to enter India

As US-based electric car maker Tesla Inc plans its India entry this year, it has taken a tax-friendly jurisdiction route. The route taken by Elon Musk-led Tesla will allow it to avail benefits on capital gains and dividend payments. Also, the European country's strong intellectual property (IP) framework will allow Tesla to bring the latest technology to the country.

The company's incorporation documents reveal its India unit, Tesla Motors and Energy, India, has a parent company based in Amsterdam, Tesla Motors Amsterdam, The Economic Times reported. The Netherlands-based company, Tesla Motors, is the subsidiary of California-based Tesla Inc.

The Netherlands offers favourable tax rates and strong IP protections, thus attracting global companies, especially from the US, to route investments via the European country. The tax treaties between India and the Netherlands allow companies to get capital gains tax exemption if shares of an Indian firm are sold to a non-Indian entity. The investments coming from the Netherlands also attract lower dividends as well as withholding taxes.

Also read: Tesla incorporates firm in Bengaluru with 3 directors, scouts for land

Ahead of its highly anticipated launch in the country, Tesla has incorporated a company in Bengaluru - Tesla India Motors and Energy Private Ltd - with a paid-up capital of Rs 1 lakh and three directors. The registered address of the company, which is likely to be its headquarters, is in the heart of the city, barely a kilometre from the high profile UB City complex.

Also read: 'Tere mere pyaar ke charche': Tata Motors teases Tesla amid rumours of JV; deletes tweet

The firm was incorporated as recently as January 8 and two of the three directors of this company are high-ranking officials in the parent company. Vaibhav Taneja is the Chief Accounting Officer at Tesla and David Feinstein is a global senior director. Relatively, little is known about the third director Venkatrangam Sreeram, who is also on the board of two other firms - Xenon Automotive India, an automotive fleet and dealer management firm, and Clearquote Technologies India, an artificial intelligence firm that specialises in vehicle inspections.

The company will likely take a direct-to-customer retail route to bypass the need for brick and mortar showrooms and service centres. Tesla is also scouting for land possibly for manufacturing and R&D set up in the country.

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