India has signed an international tax agreement that could be an effective and practical tool to help tax authorities here in combating tax avoidance and evasion.
This agreement — multilateral convention on mutual administrative assistance in tax matters — is now being seen as the ‘gold standard’ for co-operation in tax administration.
This multilateral pact was signed at the OECD headquarters in Paris by a Finance Ministry official — Mr Sanjay Mishra, Joint Secretary, CBDT, along with OECD Deputy Secretary General, Mr Rintaro Tamakio.
Reacting to the development, Mr Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration, said that India has moved very quickly since its commitment to the convention at the November G20 ceremony in Cannes. “I expect India will be the first non-OECD G20 country for which the updated convention is in force”, he said in a statement.
The multilateral convention covers all taxes (both direct and indirect taxes), all forms of exchange of information and provides for assistance not just in the assessment of tax but also in the actual collection.
India had at the G20 leaders’ Summit at Cannes in November last year signed a letter of intent for signing the multilateral convention.
By signing the convention, India and the other 31 signatories encourage more countries to join, sending a strong signal that countries are acting together 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 United Kingdom and the United States.