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Tax avoidance has become an area of concern and several countries, including India and China, said a white paper by the Confederation of Indian Industry. The paper, ‘Evolving Global Tax Policy Trends: Outlook for India’, suggested an early implementation of Goods and Services Tax (GST) to eliminate this.
Relating to indirect taxes, the report mentioned that in the aftermath of the global financial crisis, countries are more inclined towards raising revenues through value-added tax. The paper recommends an early implementation of GST in India, which would simplify and rationalise the current indirect tax regime in the Centre and states, eliminate tax cascading and put the Indian economy on a higher growth trajectory.
The white paper states that major developing countries such as India and China, which have identified base erosion as a major concern, are actively working with OECD (Organisation for Economic Co-operation and Development) countries on base erosion and profit shifting (BEPS).
The paper acknowledges that in an increasingly interconnected global economy, countries are adopting investor-friendly approach by ensuring certainty and predictability in their tax systems and reducing the cost of compliance.
At the same time, emerging economies are expecting foreign investors to contribute to the exchequer by paying the taxes, which are due to them.
Chandrajit Banerjee, director-general of CII, said: "Our country needs a tax system which is simple, broad-based, less litigious and transparent and ensures international competitiveness. We need to benchmark our systems with international best practices. The white paper provides deep insights into evolving tax landscape around the world and in India."
The paper noted that in July 2013, OECD launched an action plan on BEPS, based on the recommendations of the G20 finance ministers, identifying 15 specific action steps needed to equip governments to prevent ‘double non-taxation’.
The paper also referred to ‘digital economy’ issues, which are relevant in the Indian context.
