HUL sets up fully owned subsidiary Unilever India Ltd to save on corporate tax

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, according to its latest annual report.

“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.

Last year, the company had announced it will set up a new unit with an authorised capital of Rs 2000 crore to leverage on enablers including corporate tax as well as ‘make in India’ initiative. According to the tax slabs announced by finance minister Nirmala Sitharaman in 2019, 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,

will buy products from the new company which will only be entitled to manufacturing profits and not marketing profits.


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