Monday, August 11, 2008

The secret of Sun Pharma

If you analyze the profit loss account of Sun Pharma, you will find that the company hardly pays 3-4% of its PBT(profit before tax) as Tax, while CIPLA, Cadila pays almost 20% of their PBTs as tax. The reason behind this low payout of income tax lies in one of its subsidiary partnership firm established in tax heaven of "British Virgin Island(BVI)". The rule of this island is that if a company makes 90% of its profit outside BVI, it only has to pay 1% income tax. Sun pharma does all its profitable business through this subsidiary, earns 1500 Cr worth of profits and pays meagre 2% as tax. I don't know if this should be considered good for shareholders or bad.
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