India has signed an international agreement that could be an effective tool to help it combat tax avoidance and evasion.
This agreement — Multilateral Convention on Mutual Administrative Assistance in Tax Matters — is being seen as the ‘gold standard' for co-operation in tax administration.
This pact was signed at the OECD headquarters in Paris by Mr Sanjay Mishra, Joint Secretary, Central Board of Direct Taxes, in the presence of the OECD Deputy Secretary-General, Mr Rintaro Tamakio.
Mr Jeffrey Owens, Director of the OECD Centre for Tax policy and Administration, said India had moved very quickly since its commitment to the convention at the November G20 meet in Cannes. “I expect that India will be the first non-OECD G20 country where the updated Convention is in force,” he said in a statement.
The multilateral convention covers all taxes (direct and indirect), all forms of exchange of information and provides for assistance not just in tax assessment but also in the actual collection.
At the G20 leaders' Summit at Cannes in November last year, India had signed a letter of intent on the multilateral convention.
By signing the convention, India and the other 31 signatories will encourage more countries to join, sending a strong signal that they are acting in unison to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place.
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, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, the UK, and the US.