The pact will help it to curb tax evasion and trace black money stashed away abroad
In yet another move to get information about black money stashed away abroad, India has signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, a multilateral agreement that promotes international cooperation while respecting the rights of taxpayers.
This will send a strong signal that India and the other 31 signatory countries have joined hands to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place. The Convention provides for administrative cooperation among the parties in the assessment and collection of taxes, with a view to combating tax avoidance and evasion, according to a statement by the Organisation for Economic Cooperation and Development (OECD) here.
With taxpayers increasingly operating on a global basis, tax authorities are moving from bilateral to multilateral cooperation and from exchange of information on request to other forms of cooperation. The convention is an effective and practical tool to help tax authorities in their everyday work. “India has moved very quickly since its commitment to the Convention at the November 2011 G20 ceremony in Cannes and I expect it will be the first non-OECD G20 country for which the updated Convention is in force,” said Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration.
Signatories to the amended Convention are: Argentina, Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Moldova, the Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, the United Kingdom, and the United States.
The Convention was signed by Sanjay Kumar Mishra, Joint Secretary, Foreign Tax and Tax Research Division, Department of Revenue, in the presence of Deputy Secretary-General of OECD Rintaro Tamaki. This instrument hitherto available for members of the OECD and the Council of Europe was amended in 2010 and made open for all countries in June 2011.
Wider network
The Convention was amended to respond to the 2009 G20 Summit call for developing a broader multilateral approach to improve the effectiveness of exchange of information, cooperation among the countries in the assessment and collection of taxes, with a view to combating tax avoidance and evasion. Many more countries are expected to sign the Convention. This provides for a wider network of countries cooperating in exchange of information, assistance in tax collection.
The convention is based on international standard of transparency and exchange of information. This instrument is multilateral and a single legal basis for multi-country cooperation as against the DTAAs/TIEAs which are bilateral. It provides for an extensive network and there will be consistent application of provisions, leaving limited scope for deviation. It provides extensive forms of cooperation among the signatories on all taxes. It not only facilitates the exchange of information, but also provides for assistance in the recovery of taxes. This will give a fillip to the efforts of the government to bring back Indian money illegally stashed away abroad.
Tax examinations
The convention provides for simultaneous tax examinations and participation in tax examinations in other countries. It provides for examination of tax affairs of the taxpayers simultaneously in their own territory and share the relevant information with each other.
This allows tax officials to enter into the territory of the other country to interview individuals and examine records. It also provides for automatic exchange of information, spontaneous exchange of information and exchange of past information in criminal tax matters.
The information received under the convention can also be used for other purposes besides those related to tax cooperation, such as countering money laundering, with the approval of the supplying state.
Keywords: Indian money in foreign banks, tax evasion, DTAA, blackmoney
We should not hold our breath, the crooks inside and outside the political circles are experts in dragging,obfuscating and sidelining this issue and shutting down persons like Baba Ramdev.
Its impact of Global movement against black money in tax haven countries .Black Money in Swiss Banking and others tax haven countries is effecting Global Economy and main cause of Terrorism After it Global Economy will grow
It is not tax issues which are very important. It is rampant corruption by the top political leadership, which needs attention from the Govt. of India !! We all know, they shall not shoot their own feet !!
This is step in the right direction. However what is surprising the country that matters most in this issue - Switzerland, is absent.
Interestingly, Switzerland is not part of this treaty...
They do sign a treaty. They will collect information on suspected personnel's. Then let the information documents sleep through the suspects life! Even students misconducts in exams were published in university's websites with photos. But government will never let the name out. Is it fair?
It is a good start, but the tax heavens are missing from the list.
A wonderful move. Individuals by nature do not like to pay tax unless there is a force from behind. The fact remains we structured, restructured, simplified and modified the Indian tax system many a time to see that the prevalence of tax evasion and avoidance is eliminated. We are not running short of any more laws domestically. Still the clever tax payer explores new avenues fooling the legislators. We expect the same tax payer to fall in the net spread in the international market. A fish out from the pond falls in the lake. Still an access in to the international market is a welcome move. Now the evaders will move away from the 31 member nations to the abstained ones. Let us hope that at least in the course of time the evaders will be checkmated in the atlas of global tax board. A provision to exercise the vested authority in retrospective effect with out notice may find some big sharks falling in the net.Needless to say that it is not the tax amount which matters but the stashed.
Good Step....
How many more, international treaties, India has to sign in getting final information about the black money stashed abroad by Indians? How many more years they have to hang around?
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