According to its latest annual report, Hindustan Unilever has set up a new fully owned subsidiary – Unilever India Ltd last year, that will help the maker of Rin and Dove significantly lower taxes under corporate tax rate reduction.
“Presently, the company is in the process of setting up its manufacturing facility at Sumerpur, Uttar Pradesh. It is proposed to manufacture spray drying washing powders at this factory. The company is in the process of issuing shares of Rs300 crores by preferential allotment” added the report.
Taxation
The government slashed corporate tax rate to 22% from 30% for existing companies, and to 15% from 25% for new manufacturing companies.
HUL, the country’s biggest consumer goods firm, has nearly 30 manufacturing facilities and attracts corporate tax of over 25%.
However, none of the infrastructure can be transferred into the new subsidiary which has to invest in a completely new set-up to benefit from the reduced 15% tax rate.
With arm’s length transaction pricing, HUL will buy products from the new company which will only be entitled to manufacturing profits and not marketing profits.
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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
