G-20 must look into e-commerce taxation issue: Suresh Prabhu

India has circulated a paper on the issue of taxation of global companies, an issue which will be raised at the forthcoming G-20 meeting in Brisbane later this month.

Briefing newspersons on the meeting, Suresh Prabhu, the ‘Sherpa’ for Prime Minister Narendra Modi at the G-20 meeting, said that a view on profit shifting had not been firmed up as yet by anyone. Sherpa is a senior official responsible for preparing the agenda for leaders attending the summit.

Pointing out that the principles for base erosion and profit shifting have been laid down and have been more or less agreed to between countries, Prabhu said there was a need to go beyond this and look at the possibility of transactions taking place in e-commerce.

“E-commerce happens in one country, the person who manages the logistics could be in another country, the manufacturer of the product sold through this process could be in yet another country while the consumer could be in a different country.

“So where do you tax such a transaction? It is issues like this which really need a global consensus. That is why we talk about global governance issues,” he said.

Prabhu also pointed out that there should be automatic sharing of information on taxes for which a proper database or a proper information platform is required.

India will also raise the issue of reducing the cost of sending remittances at the global meeting. Suresh pointed out that Saudi Arabia has agreed to reduce the amount charged from a person remitting foreign exchange to India to 3.5 per cent. “This will benefit our poor workers immensely. This will also mean that more money will come into India’s external account,” he said.

At the summit, which is to be held on November 15-16, India will also flag the issue of development of infrastructure, energy and environment apart from other social issues which ensure that not only does global GDP grow but which also lead to more jobs.

“India is in the forefront of saying that we should have a dialogue on the gas market. India has a big stake in this as we do not produce enough for the requirements of the country,” he said.