India has, at the G20 finance ministers meeting in Paris, highlighted the need for all countries/jurisdictions to treat tax evasion on the same footing as "tax fraud" so that information on tax evaders can be freely exchanged.
Finance minister Pranab Mukherjee told the G20 leadership that some countries/jurisdictions differentiate between "tax fraud" and "tax evasion" and this difference in perception assists deliberate concealment of wealth for the purpose of evading tax, something regarded as a crime all over the world. The distinction is being used to prevent effective exchange of information.
According to a finance ministry statement, Mukherjee said, "We should encourage countries to remove this distinction in order to help efforts of government authorities in pursuing tax cheats who have parked funds outside the country."
"We also have concerns over continuing attrition of national tax bases through overseas and difficulties in obtaining necessary information on transaction undertaken by taxpayers that involve tax evasion," he added.
Overcoming tax evasion requires close coordination between all countries on a multilateral basis. There is a need to develop an effective multilateral platform for automatic, spontaneous and requested exchange of information, he added.
Mukherjee lamented that although at the Seoul G20 summit, all jurisdictions had been urged to stand ready to conclude the Tax Information Exchange Agreements (TIEA) where requested by a relevant partner, some countries are still not responding to the call.
Instead of entering into a TIEA these jurisdictions continue to insist on entering into a Double Taxation Avoidance Agreement (DTAA). The Indian finance minister said, "We may need to consider classifying such jurisdictions as non-cooperative jurisdictions." He suggested that the Global Forum on Transparency and Exchange of Information for Tax purpose should take up this issue while reviewing such jurisdictions and report back to the G20.
The G20 has left it to each country to develop a toolbox of counter-measures against noncooperative jurisdictions. India will soon come up with such a toolbox.
Mukherjee said that since the London G20 summit more than 500 tax information exchange agreements have been signed to promote international cooperation in tax matters through the exchange of information. However, the effectiveness of these instruments to combat tax evasion needs to be strengthened.
"We may encourage the Global Forum on Transparency and Exchange of Information for Tax purpose to develop a framework to monitor the effectiveness of these instruments on regular basis and report back,"he suggested.
Courtesy: Mail Today
Special 
