Sunday, June 26, 2011

For Thursday evening (Friday eve) The story of Mushkil Gusha

Dear Readers,

Stories in several cultures, be it India, Iran, Morocco are passed on from generation to generation. Recently, I read the book In Arabian Nights (IN search of Morocco, through its stories and story tellers) by Tahir Shah and came across the story of Mushkil Gusha, the remover of difficulties.

It is said: "When your need is greater than your want,
Mushkil Gusha will appear and remove all difficulties"

I heard this story, when I was a child, from both my paternal and maternal grandmothers. Unfortunately, both my grandfathers expired when my mother and father were toddlers. But, I guess my grannies more than made up for it, by passing on several stories, including the story of Mushkil Gusha and yes, it came replete with an offering of candysugar, roasted gram (chick peas) and dried raisins, which were distributed on Friday eve. Thus, I was delighted to come across the story of Mushkil Gusha again.

This story has a few varied forms, such as change in name of the characters, but the essence is the same. Once you know the story, or rather some of it (as this story is supposed to never really end)you must retell it every Thursday after dusk.

I googled and found two variants of this story.

I am pasting one of the versions here:

Retold by Eric Twose

Once upon a time not so long ago, there lived a woodcutter whose name was Ahmed. The old man was a widower and he lived with his daughter, Samira, in a small hut in the forest.

He used to go every day to chop branches from the trees, cut the branches up, gather the sticks together and take them back home. Then, in the afternoon, he'd have a bite to eat and take the sticks to the nearby market town, where he'd sell them for firewood and buy some food for himself and for his daughter.

One evening, they'd just settled down to eat their meal when Samira said: 'Father, I sometimes wish that we could have different kinds of food to eat .'

The old man thought about this and so the following morning he got up much earlier than he usually would and he went deeper into the mountains where there were more trees.

Ahmed worked long and hard sawing wood and bundling it up, and he collected far more than he usually would. And when he'd done, the old man carried the heavy bundle back home on his shoulders and left it round the back of the hut, ready to take to market.

When he tried the door of their little hut, he found it locked and he knocked and knocked, calling 'Samira, Samira, please let me in, for I am tired and hungry and I must have something to eat and have a nap before taking the wood to market.'

But while he'd been away, having forgotten all about their conversation the night before, Samira had got up, made herself some breakfast, tidied the hut and gone out for a walk by the stream.

So the old man thought about this and decided that he might as well go back into the mountains and collect some more wood, so that the next day they'd have a double load of wood to take to market. And he worked for longer than he he usually would, sawing wood and bundling it up.

When he'd done, the old woodcutter carried the heavy bundle back home on his shoulders and left it round the back of the hut, ready to take the double bundle of wood to market first thing the next day.

When he returned, however, he was already much later than he would usually be, and Ahmed again found the door locked, and he knocked and knocked, calling 'Samira, Samira, please let me in, for I am tired and hungry and I must have something to eat and sleep if I am to be up early tomorrow morning for market.'

But while he'd been away, his daughter had returned, made herself something to eat and gone to bed, thinking that her father must have gone to market and arranged to stay the night there.

So, tired and hungry, the old woodcutter went to sleep by the piles of wood round he back of the hut. But he was so tired and hungry that he could not stay asleep.

Then Ahmed thought he heard a voice saying: 'Old man, what are you doing there?'

'I am telling myself my own story,' he replied and went on to tell everything that had happened to him since his daughter had first mentioned wanting different kinds of food to eat.

Then the voice told him to leave his wood. If you want little enough and need enough,' the voice said, 'you shall have delicious food.'

So the old man got up and followed the voice, but eventually as the light faded, he became hopelessly lost. And again, even more tired and hungry by now, he sat down and fell asleep. But he was so tired and hungry that he could not stay asleep.

Then he thought he heard a voice, just like the first, telling him to follow him. The voice told him to stand up, close his eyes and to raise his right leg, as if mounting a stair.

'But I do not se a stair,' he said.

'Nevertheless,' the voice insisted: 'If you wish me to help you, do as I say. Stand up, close your eyes and raise your right leg, as if mounting a stair.'

The old man did as he was told and as soon as he thought of it, he found himself standing up. He lifted his right leg and, sure enough, when he put his foot down, he could feel a step beneath him.

'Keep your eyes closed until I tell you to open them,' the voice commanded.

And not the old woodcutter could feel that the staircase was moving quickly and he could feel himself being lifted up with it.

Finally he reached the top of the staircase and the voice told him that it was alright to open his eyes now.

So the old man opened his eyes and when he did so, he was astonished to find himself in a place that looked like a desert, except that instead of sand, the place seemed to be made out of gleaming stones in all colours: red, green and blue.

'Now, gather up as many of these stones as you can,' the voice told him, and he filled his pockets and his shirt with them until he could carry no more.

'Now, close your eyes once more,' the voice said. 'And don't open them until you are at the bottom of the staircase.'

He did so, and again he felt something like a staircase, moving beneath him. And when he opened his eyes, he saw that he was back home, standing outside his own little hut.

He knocked at the door and Samira came out to greet him, and he told her what had happened to him while he'd been away. But his story seemed so far-fetched to her and she could make little sense of it.

They did not know what to do with the stones - they looke dlike ordinary stones to them - so they placed them in a corner of the room and left them there.

'Nevertheless, you may not know it,' he said, as they ate their meal and shared some dates that evening: 'but we have been helped by Mushkil Gusha. Mushkil Gusha is the remover of all difficulties, and we must always be grateful. Every Thursday evening we must give thanks or give a gift to the needy, in the name of Mushkil Gusha.'

Each day for a week, he collected wood and sold it easily for a god price, so he bought different kinds of food for himself and his daughter to eat.

Then one evening, there was a knock at the door and when he opened it, he found it was his neighbours. 'Our fire has gone out. Please give us some of those wonderful lights which you have in your window.'

'What lights?' the old woodcutter asked.

'Come outside,' said one of his neighbours, 'and see for yourself.'

And, sure enough, when he went outside and looked, Ahmed saw all-manner of wonderful lights streaming out of the window.

He went inside and checked, but found that the light coming from the stones was cold and he could not have kindled a fire from it, so he went outside and said: 'Neighbours, I am sorry, but I have no light to give you.'

He shut the door in the neighbours' faces, and they went away muttering. But they leave our story here.

Then the old man and his daughter Samira covered the stones up with all the scraps of cloth they could find, for fear that someone would come and steal them.

Next morning, when they uncovered the stones they found a heap od sparkling precious gems. And each day they took them to different towns and sold them, and with the money they received they built a fine mansion right opposite the king's palace.

One morning, the king's daughter got up and saw the mansion. 'Who has built it?' she demanded to know. 'How dare they build such a thing so close to the palace?' And she sent her servants to assertain the woodcutter's story as best they were able.

So the princess set out to confront the woodcutter and his daughter, but when the princess and Samira met they soon became fast friends and they used to go and play in the stream which the princess's father had built for her.

Then one day, as the princess was going to swim in the stream, she took off a valuable necklace her father had given her and hung it on the branch of a tree overlooking the stream. And when she came out, she forgot it.

When she got back home, the princess noticed that the necklace was missing and she thought a little and decided that the woodcutter's daughter must have taken it, so she ran to her father the king and told him. He had the woodcutter arrested and thrown into jail, had his land confiscated, and had the daughter sent to an orphanage.

After a time, according to the customs of the country, the old woodcutter was taken from the cells and put in the stocks in the town square with a sign around his neck which read: 'This is what happens to people who steal from kings.' And for a time the townspeople would jeer at him and throw rotten vegetables in his face. But after a time they forgot about him, as is the way of men. Sometimes a passer-by would toss him a little food; sometimes they would not and he would go hungry.

Then one Thursday evening, the old man suddenly realized that it was the eve of Mushkil Gusha, the remover of all difficulties, and that he'd forgotten to commemorate the occasion for so long.

No sooner had the thought entered his mind than a passing merchant tossed him a tiny copper coin.

'Kind sir,' said the woodcutter. 'This coin is of no use to me. But if your generosity would stretch to buying a handful of dates with the money and you would come and share them with me, I would be eternally grateful.'

And so the merchant bought some dates and shared them with the old man and Ahmed told him his whole story right from the time his daughter first asked for different kinds of food to eat, and how he'd been helped by Mushkil Gusha, the remover of all difficulties.

'You must be mad,' the merchant said, but he himself was beset by difficulties and when he returned home he found they had been remarkably removed, which made him think a great deal about Mushkil Gusha. But he leaves our story here.

The very next day, the princess went back to her favourite bathing place and as she bent down to dive in, she thought she saw something glistening in the bottom of the pool. At that moment, she happened to sneeze and as her head went back she noticed her necklace hanging in a branch where she'd left it so long ago, and that what she'd thought was a necklace in the stream was merely a reflection.

So she took the necklace and ran back to the palace to tell her father, the king, and he had the woodcutter released and his daughter brought back from the orphanage.

And they all lived happily ever after.

Another link to the story:
The Magic of Mushil Gusha told by Aaron Shepard

Idries Shah: CARAVAN OF DREAMS, The Octagon Press, London 1968

Source of the photograph: Beauty of Sun Photography

Friday, June 24, 2011

Law Street - Economic Times (June 2011) -CCCTB in the EU

Dear Readers,

We have seen the fall of the Berlin Wall, the emergence of the Euro, now what next? Perhaps we may see the CCCTB or CCTB in the years to come.

Currently, companies operating in the European Union may have one single currency to transact in, but they have to deal with 27 different tax provisions for calculating their taxable profits, and must file returns with the tax authorities in each EU country in which they operate. This is neither cost-effective nor tax-efficient.

Thus, on the drawing board is a proposal that will help them file just one tax return. The single consolidated tax return would be used to establish the tax base of the company, after which all EU countries in which the company is active would be entitled to tax a certain portion of that base, according to a specific formula based on three equally-weighted factors (assets, employees and sales). Each member country can levy its own tax rate against this base.

While Germany and France are fully supporting the CCCTB, other EU countries haven't jumped on this gravy train as yet.

You may read this column online in The Economic Times, by clicking here. Alternatively the article is pasted below. Happy Reading.

Best regards,

CCCTB, what on earth?
• EU’s CCCTB move is expected to reduce tax costs

• Even Indian companies with EU operations can opt in

• Not all EU countries are keen to jump on the bandwagon

The sentence reads: CDB. DBSABZB or rather: See the Bee, the Bee is a busy bee. ‘CDB’, is in fact a famous children’s book, first written by William Steign in 1968 and its popularity remains unabated. Thus, when I came across the word, CCCTB, I immediately had this vision of an overeager kid excitedly pointing to a bee in the garden. But what stand for is EU’s: Common Consolidated Corporate Tax Base proposals, which are now up on the drawing board.

Under the proposed mechanism, a company or group of companies would have to comply with just one EU tax system for computing their taxable income, rather than following different rules in each EU country in which they operate and would have to file a single tax return for the whole of their activity in the EU.

The single consolidated tax return would be used to establish the tax base of the company, after which all EU countries in which the company is active would be entitled to tax a certain portion of that base, according to a specific formula based on three equally-weighted factors (assets, employees and sales).

The objective of the proposed approach is to create the possibility for such companies to pool profits and losses among their EU group companies, minimize tax compliance costs and mitigate transfer pricing complexities. Currently, companies operating in the EU may have one single currency to transact in, but they have to deal with 27 different tax provisions for calculating their taxable profits, and must file returns with the tax authorities in each EU country in which they operate. This isn’t cost effective nor tax efficient. Besides reduction in compliance costs, by allowing the consolidation of profits and losses at EU level, the CCCTB would enable the cross border activities of businesses to be fully taken into account and would avoid over taxation.

Information available in cyberspace indicates that the EU Commission views that the CCCTB will save corporate groups across the EU something like Euro 700 million in compliance cost savings each year. In addition, by allowing businesses to offset losses in one EU country against profits elsewhere in the EU for tax purposes (i.e. consolidation), CCCTB could result in additional savings for companies operating in the EU of around Euro 1.3 billion.

In fact, the CCCTB proposals are proposed to include not just the blue-blooded (if one may use this term), but also covers companies established under the laws of a third country, such as India, that have similar legal forms and are subject to corporate taxation in at least one member EU country. Thus, if an Indian company has branches or subsidiaries in the EU member country, it could opt for the CCCTB in relation to its EU business activities.

The point to note is that CCCTB is optional. However, once a group of companies opts to use the CCCTB, the member companies are no longer able to utilize individual member country tax incentives. While Germany and France have supported the CCCTB movement, it has not enjoyed universal support, with current opposition from Ireland, UK, Netherlands, Bulgaria, Sweden, Poland, Malta and Romania.

A UK tax expert tells Zenobia Aunty, that member countries will continue to have the right to decide on their own corporate tax rates, as CCCTB deals with the tax base and not the tax rate. However, a member country could choose to apply a different tax rate for the CCCTB if its own national base was extremely different and it wanted to maintain the same effective tax rate (i.e. the real level of tax paid once the rate, base and various deductibles are taken into account). For example, if the CCCTB base were broader than the national base, the member country may choose to set a lower rate for the CCCTB to maintain the same effective tax rate. Or member countries could align their national bases close enough to the CCCTB in order to avoid having different rates for the two.

However, there is growing competition among countries to attract investments, be a good jurisdiction for housing of corporate headquarters. Take UK’s recent tax developments. It wishes to have a low tax rate among the G20 so as to attract foreign companies.

The competition is stiffening to capture more activity in one’s country by offering various sops such as low tax rates, full territorial taxation and so on. Given this, it remains to be seen how the final picture on the CCCTB will emerge, a common base and no consolidation may be a possibility, or some countries could join in and kick start the movement. For now, all one can say is let us wait and C (see).

Source of the picture

Thursday, June 02, 2011

Law Street - Economic Times (May) -Unearthing black money

Dear Readers,

Newspapers are filled with news on how essential it is for the government to unearth black money stashed away in low tax jurisdictions. Social activists are even going on hunger fasts to protest against the perceived failure of the government to tackle the black money menace.

While it appears that Mauritius has agreed to part with some information, perhaps taking a leaf from what the UK government has done in relation to Swiss accounts of UK citizens is needed. In other words, the interest income in relation to such bank accounts will be subject to a withholding tax which will be passed on to the UK treasury coffers. A quick way indeed.
Click here, for the online edition of The Economic Times, to read this column. Else, as always scroll below.
Have a nice weekend.

A bird in hand, is worth two in the bush

• India could follow UK’s example of taxing Swiss bank interest
• This will speeden by the process of bringing back black money
• Tax treaties, till amended are sacrosanct

Zenobia Aunty is one perplexed lady. Things appear to be in a complete flux in tax-land. One stand is taken today and yet another the next day. These days, poor Aunty is scared to read the newspapers or tune in to the news.

Years ago, in the famous case of Azadi Bacho, the Supreme Court has made it quite clear that Mauritius resident will not pay capital gains tax in India, on sale of Indian shares. Further, the India-Mauritius tax treaty does not even have a limitation of benefit clause, as was pointed out by the Apex Court, in this judgement.

Yet a recent news item says, that E Trade (Mauritius) which had already obtained a favourable ruling from the Authority for Advance Rulings (AAR) will have to face some sleepless nights. News reports cite that the Supreme Court has sent a notice to E Trade (Mauritius) seeking its response to the special leave petition filed by the tax department challenging this ruling given by the AAR. She wonders whether tax treaties have any sanctity at all.

While Zenobia Aunty is vehement that tax treaties are sacrosanct and bring about certainty and must be adhered to till amended, she is rooting for the efforts to bring back ‘black money’ into India.

In 2009, the Income tax Act, 1961, was amended to enable the government to enter into agreements with specified ‘non-sovereign jurisdictions’ (tax havens). Since then, India has entered into a number of Exchange of Information Agreements with various tax havens; the first such agreement was with Bermuda.

As regards countries with which India already has a tax treaty, negotiation is on-going in many instances, to bring about amendments to ensure exchange of information, if such a clause does not exist in the tax treaty. For instance, a revised treaty containing an Exchange of Information clause was signed with Switzerland.

These are steps in the right direction and such efforts need to be applauded. But, Zenobia Aunty, being an impatient lady and a cranky one at that (she blames her crankiness to a severe allergic cold), is asking: Where is the moolah?

According to her, perhaps, India needs to take a second look at the step adopted by the United Kingdom (UK). Last October, the UK and Swiss governments signed a joint declaration to work towards taxing UK owned Swiss bank accounts. Recent news reports say, the deal is almost concluded and will be announced shortly.

Swiss banks will now be obliged to tax interest payments made to UK bank account holders. Switzerland will impose a 50% withholding tax (earlier this percentage was believed to range between 20 to 30%) on income from Swiss bank accounts. This would be collected by Swiss banks, forwarded to the Swiss tax authority and then remitted anonymously to UK’s Treasury authorities. While this withholding tax will apply from the start date, it is reported that investors will have to pay a separate one-off levy in recognition of past unpaid taxes. We need to wait and see what the final fine print will be.

As part of the agreement, Swiss banks will require all British clients to supply evidence that their bank accounts comply with the UK’s tax system.
The money collected in withholding taxes will be collectively handed over to the UK Treasury and will not include any details of who has paid them. The deal therefore allows the UK to collect tax on Swiss bank accounts and at the same time allows Switzerland to retain its banking secrecy.

The UK Treasury estimates that British tax residents have 125 billion British Pounds hidden in Swiss banks. The interest earnings are not being declared and therefore not being taxed by the UK tax authorities. This deal with Switzerland will therefore be a lucrative victory for the UK Treasury. It has been estimated that the UK Treasury will earn between 3-6 billion British Pounds over the next few years as a result of this agreement.

Maybe India needs to think along these lines? It is true that under such an agreement, India will never know the names of those who stashed their money overseas. But the end result is that India will get its share of revenue, which it would have never captured or got into its kitty after ages. After all, a bird in hand is worth two in the bush.

India must be perceived as a country that is not against foreign investments or cross border transactions – unfortunately with the mixed signals being thrown out foreign investors are perplexed. Simultaneously, India must also be perceived as a country that is willing to take action to ensure that it gets its due share of money that is illegally stashed in secret bank accounts overseas.

Since this is the summer season and many are on vacation, Zenobia Aunty quotes one of her favourite travel authors. Paul Theroux said: Tourists don’t know where they’ve been, travelers don’t know where they are going. But, the tax administration and judiciary need to know the right path to walk upon, to ensure results that are best for India in the long term.