The government of India is considering joining a multilateral platform initiated by the Organisation for Economic Cooperation and Development (OECD) and the Council of Europe for promoting international cooperation in the assessment and collection of taxes.
The Convention on Mutual Administrative Assistance in Tax Matters will provide for exchange of information (on request as well as automatically) on tax examinations, assistance in recovery, measures of conservancy and service of documents. It can also facilitate joint audits.
The club has 20 countries as members so far. The nations have agreed to provide all possible forms of administrative cooperation among themselves, while respecting the fundamental rights of taxpayers. Information obtained under this agreement may be relevant for pursuing serious financial crimes.
The matter is under consideration, said a finance ministry official.
Belgium, Denmark, Finland, France, Georgia, Iceland, Italy, Korea, Mexico, Moldova, the Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Sweden, Ukraine, the United Kingdom and the United States have already signed the Convention.
The cooperation between these nations will cover all compulsory taxes such as income tax, wealth tax, capital gains tax, gift tax, and local taxes, with the exception of customs duties. However, countries will have a choice to express their reservations regarding the taxes covered. More, certain areas, such as automatic exchange of information and tax examinations, will require previous consent of the nations concerned.
Advantages
Under this Convention, India will be able to seek information even from those countries with which it has no bilateral tax agreement.
Though, information provided by one party to another could be transferred to a third party only with prior authorisation of the information providing country.
The G20 group of nations has also urged all jurisdictions to extend their Tax Information Exchange Agreement (TIEA) networks and consider signing the Convention.
India is already in the peer group of OECD to review transparency and cooperation in tax matters by the countries.
OECD is a 34-country grouping. Though India is not a member, it has close relations with it. Together with India, and other countries like China, OECD brings 40 countries together that account for 80 per cent of world trade.
Based in France, the Council of Europe has almost every nation of the continent as its members. It seeks to develop common and democratic principles based on the European Convention on Human Rights.
India is in negotiations with 22 jurisdictions for signing a TIEA. India also has a Double Taxation Avoidance Agreement (DTAA) with 79 countries. It has initiated negotiations with 65 countries to broaden the scope of the article on exchange of information, to include exchange of banking information. Negotiations and renegotiations of DTAAs with 23 countries have been completed.
It also proposes to create eight new income tax units abroad to have effective exchange of information on tax matters under a DTAA. I-T units at the Indian missions in Mauritius and Singapore have already been set up. More are being planned in the US, the UK, Netherlands, Japan, Cyprus, Germany, France and the UAE.
