Has anyone looked at the recent 10Q from INFY? They have benefited from a tax break for the past decade;that benefit is to run out at the end of 2009. (This Co is ranked 84 in the top 100 companies from better investing)

Because 67% of their sales are generated in India, this increased tax burden could shrink their bottom line by more than 20%.

Here is what the Co said in the 10Q:

"Our net income earned from providing software development and other services outside India is subject to tax in the country where we perform the work. Most of the tax paid in countries other than India can be applied as a credit against our Indian tax liability to the extent that the same income is subject to tax in India.

Currently, we benefit from the tax holidays the Government of India gives to the export of software from specially designated software technology parks in India and for facilities set up under the Special Economic Zones Act, 2005. As a result of these incentives, our operations have been subject to relatively low tax liabilities. These tax incentives include a 10-year tax holiday from Indian corporate income taxes for the operation of most of our Indian facilities. As a result of these tax exemptions, a substantial portion of our pre-tax income has not been subject to significant tax in recent years. These tax incentives resulted in a decrease of $224 million and $209 million in our income tax expenses for fiscal 2007 and nine months ended December 31, 2007, respectively compared to the effective tax amounts that we estimate we would have been required to pay if these incentives had not been available."

From PERT A, I figured that the Co. Pre tax margin would have shrunk from 31.7% to 24.8% in the last 9 month period, if they did not have the tax holiday. Earnings would have been $1.16 instead of $1.48-a decrease of 22%.

The question is : Does the Co. beleive that the tax holiday will go away for all Indian faciilities? How many facilities are located in the "Special Economic zones"-are there plans to move or increase facilities in these zones? What does the company envision the effect on Operating Income will be from these changes?

Pat Landers