BEPS Implementation

US proposal to raise the global corporate tax rate to 28% from 21% might face resistance from countries unwilling to give up their edge and compete with America on its terms

Although India has signed the multi-lateral instrument (MLI) to curb tax evasion as a part of Organisation for Economic Co-operation and Development (OECD), lawyers and tax experts see implementation hurdles. According to them, several provisions of the instrument are not maintainable under the domestic laws. Further, even the implementation of the basic structure of MLI would need lot of amendments to the current law.Last month, the union finance minister Arun Jaitley signed the MLI along with 100 other countries in Paris. The basic idea of the instrument is to curb tax evasion by MNCs who exploit the loopholes in the current tax treaties. To address the issue OECD had developed a framework called base erosion and profit sharing (BEPS).One of the important contentions is that Indian government is currently allowed to get into such tax arrangements with sovereign nations only. OECD, with whom the MLI has been signed, is not a nation but an umbrella of nations. Legal experts say ...