India Signs International Pact To Check Tax Evasion By Multinational Companies

The Logical Indian Crew

June 9th, 2017 / 6:43 PM

Courtesy: News18 | Image Credit: New Indian Express

India and 67 other countries have signed a ground-breaking multilateral Base Erosion and Profit Shifting (BEPS) convention that will close loopholes in thousands of tax treaties worldwide and check tax evasion by multinational companies (MNCs).

Finance Minister Arun Jaitley signed the convention at the Organisation for Economic Co-operation and Development (OECD) headquarters in Paris on Wednesday, 7 June.


The Multilateral Instrument

On 7 June 2017, over 70 Ministers and other high-level representatives participated in the signing ceremony of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”).  Signatories include jurisdictions from all continents and all levels of development.

The MLI offers concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide. The MLI modifies the application of thousands of bilateral tax treaties concluded to eliminate double taxation. It also implements agreed minimum standards to counter treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty policies.

Base erosion and profit shifting (BEPS) refers to tax planning strategies used by multinational companies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity.

In 2013, G20 leaders endorsed the BEPS Action Plan, which was devised by OECD. This plan identified 15 actions to address BEPS in a comprehensive manner and set out deadlines to implement those actions.

It took two years of hard work and hectic negotiations to reach the Final BEPS Package.


India and the MLI

India joined 65 other countries in signing the MLI.

More countries are expected to sign the convention in coming days, a finance ministry statement said. “The Convention will modify India’s treaties in order to curb revenue loss through treaty abuse and base erosion and profit shifting strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out and where value is created.”

India was part of the Ad Hoc Group of over 100 countries and jurisdictions from G20, OECD, BEPS associates, and other interested countries that worked on the finalisation of the text of the Multilateral Convention.


The text of the MLI can be read here.

The BEPS Action Plan can be read here.


Contributors

Written by :

Edited by :

Share your thoughts..

Related Stories

Karnataka gift MPs

Karnataka MPs Including BJP MPs Get iPhone X Allegedly From State Minister Who Is Accused of Tax Evasion

Robert Vadra

IT Department Asks Robert Vadra To Pay Rs 25 Crore For Tax Evasion

Fire In IT Office In Mumbai’s Scindia House, Sensitive Tax Evasion Documents Feared To Be Lost

Auditor Hired By PNB To Look Into Nirav Modi’s Firms Faces Rs 13.5 Crore GST Evasion Charges

Tamil Nadu Boycott Of Pepsi & Coca Cola Goes Into Effect; Multinational Companies Oppose It

Soft Drinks

Tamil Nadu Traders To Not Sell Soft Drinks Of Multinational Companies From March 1

Latest on The Logical Indian

News

[Video] Delhi CM Attacked With Chilli Powder Inside Secretariat, AAP Questions Police For Security Lapse

News

Migrant Kids Across The World Can Fill Up Half A Million Classrooms If Given A Chance: Report

My Social Responsibility

With Over 3 Lakh Individuals Treated Free Of Cost, This NGO Is A Saviour Of The Differently Abled

News

Uttarakhand: Tehri Cop Assaults An Architect, Allegedly Books Him Under False Charges

News

Delhi Pollution Reduced Life Expectancy Of Residents By More Than 10 Years: Report

News

Union Minister Was Paid Bribe, NSA Ajit Doval Interfered In The Probe Of Asthana Case: CBI Officer To SC

x

Stories that deserve attention, delivered to your inbox!

Handpicked, newsworthy stories which deserve the attention of a rational generation.