Conference on international taxation begins
Parthasarathi Shome, Advisor to Finance Minster, said on Friday that the issue of retrospective amendment of tax laws is a serious issue.
“Even if there is a need to amend them with retrospective effect, we should, at least, not impose penalties, interest and other punitive measures.”
Addressing a two-day conference on international taxation, organised by the Institute of Chartered Accountants of India, Dr. Shome said, “Retrospective amendments should only apply in the case of egregious tax avoidance structures” adopted by corporate entities.
“Generally, ‘retrospectivity’ is not a good idea,” Dr. Shome said.
‘Do not force investors’
Investors, he said, cannot be forced to comply with laws that they did not anticipate when they made their investments, Dr. Shome said.
Referring to the growing concern about tax avoidance by multinational companies — whether in the home base or elsewhere around the world, Dr. Shome said that multinationals, in the guise of escaping double taxation, resort to base erosion and profit shifting (BEPS), which cause losses to governments across the world.
He pointed out that the G-20, which recently met at St. Petersburg, resolved to plug the loopholes that cause revenue losses to countries across the world.
“India must participate in the BEPS project to prevent the abuse of tax treaties,” he said.