Unilever, ABB Skirt Royalty Rule With Treaties: Corporate India

Tax treaties will help the Indian units of Unilever and Nestle SA avoid paying higher levies on royalties to their parents, frustrating Finance Minister Palaniappan Chidambaram’s efforts to bolster collections.

Rules in India’s double tax avoidance treaties with Switzerland will help Nestle and ABB Ltd., the No. 1 maker of power transformers, cap tax on royalties at 10 percent, according to e-mail from the companies. Chidambaram in his budget last month proposed raising the levy to 25 percent from the year starting April 1 as he seeks to rein in the worst deficit among the largest emerging markets.