International Finance International Taxation
India is likely to join a multilateral platform "The Convention on Mutual Administrative Assistance in Tax Matters (CMAATM)", jointly developed by the Organization for Economic Cooperation and Development (OECD) and the Council of Europe for promoting international cooperation in the assessment and collection of taxes on 25 January 1988. The OECD is a group of 34 countries.
The objective of the Convention is to promote international co-operation for a better operation of national tax laws, while respecting the fundamental rights of taxpayers. The Convention provides for all possible forms of administrative co-operation between states in the assessment and collection of taxes, in particular with a view to combating tax avoidance and evasion. This co-operation ranges from exchange of information to the recovery of foreign tax claims. The cooperation between these nations will cover all compulsory taxes such as income tax, wealth tax, capital gains tax, gift tax, and local taxes, with the exception of customs duties. However, countries will have a choice to express their reservations regarding the taxes covered. In certain areas, such as automatic exchange of information and tax examinations, previous consent of the nations concerned will be required. It can also facilitate joint audits.
Till now, the convention had been signed by 20 countries. They are Belgium, Denmark, Finland, France, Georgia, Iceland, Italy, Korea, Mexico, Moldova, the Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Sweden, Ukraine, the United Kingdom and the United States.
By signing this convention, India will be able to get information even from those countries with which it has no bilateral tax agreement. Though, information provided by one party to another will be transferred to a third party only with prior authorization of the information providing country.
Apart from these, The G20 group of nations is considering signing the Convention and has urged all jurisdictions to extend their Tax Information Exchange Agreement (TIEA) networks.
India is already in the peer group of OECD to review transparency and cooperation in tax matters by the countries. Also, India is negotiating with 22 jurisdictions for signing a TIEA. Besides these, India has a Double Taxation Avoidance Agreement (DTAA) with 79 countries and has initiated negotiations with 65 countries to broaden the scope of the article on exchange of information, to include exchange of banking information. Out of these, negotiations and renegotiations of DTAAs with 23 countries have been completed.
It also proposes to create new income tax units in the US, the UK, Netherlands, Japan, Cyprus, Germany, France and the UAE to have effective exchange of information on tax matters under a DTAA. India already has income tax units in Mauritius and Singapore.