Innovative and transformative redesigning of the international tax architecture to meet the tax challenges of growing digitalization and economic globalization has been at the top of the G20 global tax agenda for much of the past decade focus. The basic rules for the distribution of taxing powers between countries established in the 1920s have been invalidated by the digitization of the economy.
Rasmi Ranjan Das
The 137 members of the OECD/G20 Base Erosion and Profit Shifting Inclusive Framework (Inclusive Framework) reached a political agreement in October 2021 on a two-pillar solution to the tax challenges posed by the digitization of the economy, which is ground-breaking. Sexual implications for new taxing powers for market jurisdictions. In addition, the G20’s work on improving tax transparency has made great strides through the establishment and adoption of the Automatic Exchange of Information under the Common Reporting Standard (AEOI-CRS).
The G20 continues to insist on strengthening automatic information exchange frameworks to ensure that emerging risks to global tax transparency are effectively addressed, and the latest Crypto Assets Reporting Framework (CARF) is one of them. The efforts of the G20 International Tax Workstream have guided and informed tax policy discussions that multilateralism is the norm for advancing international tax cooperation. In 2023, the international tax architecture is undergoing epoch-making changes. India’s Presidency has played a key role in advancing efforts towards an inclusive framework for a fair, sustainable and modern international taxation system.
The three flagship priorities that India is actively pursuing during its G20 Presidency are: (a) Monitoring the progress of the two-pillar solutions of the G20/OECD Inclusive Framework to address the digitization of the economy (b) Taxation and capacity-building; (c) Improving tax transparency. The multilateralism embodied in the theme of India’s G20 presidency – “One Planet, One Family, One Future” – has been the catalyst and main driver of all the flagship priorities of the International Tax Agenda 2023.
Since the first G20 Finance Ministers and Central Bank Governors Meeting was held in Bangalore on February 24-25, the G20 Finance Ministers and Central Bank Governors Meeting continued to play a core leadership role, promoting the rapid implementation of the two-pillar international tax package, and Progress has been made on tax reform. Other areas of international tax reform include capacity building and improving tax transparency. During the third G20 FMCBG meeting held in Gandhinagar, Gujarat, on 17-18 July during India’s rotating presidency, the G20 FMCBG welcomed the submission of the text of the Amount Multilateral Convention (MLC), the submission of the B amount work Significant progress and completion of the development of the taxation rules (STTR) and its implementation framework set out in the July 2023 Inclusive Framework Outcome Statement.
The FMCBG also welcomes the Indian Institute of South Asia’s partnership with the OECD to launch a tax and financial crime investigation pilot project. With this first step, the President of India, in partnership with the OECD, is spearheading the building of tax and financial crime investigative capacity in South Asia. During the negotiations and discussions during all ministerial and vice-level meetings of the International Taxation Agenda in the Financial Sector, there was an active multi-stakeholder dialogue on all the priorities raised by the Chair. The “oneness” embodied in the presidency’s theme “Vasudhaiva Kutumbakam” propelled the presidency to reach consensus throughout the year and refreshingly reinvigorated multilateral efforts for international tax cooperation.
The past few years have seen significant progress in the implementation of global tax transparency standards. The G20 has played an important role in shaping the tax transparency agenda. While AEOI-CRS and CARF represent significant advances in the fight against offshore tax evasion of financial assets, the President of India has initiated discussions on other classes of assets, such as real estate, which pose risks to tax transparency.
Requested by India during its Presidency, the OECD report on ‘Enhancing Transparency in International Real Estate Taxation’ has made a significant contribution to guiding work on the feasibility of future voluntary exchange of information, considering all relevant issues, including possible challenges and possible Solutions, as far as the acquisition of real estate is concerned. Tax transparency and the availability of beneficial ownership information are critical not only to deter tax evasion, but also to combat corruption and other financial crimes such as money laundering. The Global Forum Report on ‘Promoting the Use of Tax Treaties for Non-tax Purposes by Exchanging Information’, prepared at the request of the Indian Presidency, provides a way to advance and streamline the wider use of treaties in bilateral taxation between interested jurisdictions Exchange information. and on a voluntary basis, while maintaining the confidentiality of such information. These two reports, the first of their kind, will be invaluable in shaping the future tax transparency agenda at the global level.
To advance our shared goal of increasing tax transparency, on 16 July, during the third G20 FMCBG meeting held in Gandhinagar, Gujarat, during India’s G20 presidency, a session on Combating Tax Evasion, Corruption and Money Laundering was held. G20 High Level Tax Seminar. Panelist ministers and heads of international organizations acknowledged that financial crime is complex, crosses international borders and deprives governments of developed and developing countries of much-needed resources. G20 members noted with interest discussions that delved into strategies that could develop a coordinated response to combat tax and other financial crimes.
Effective multilateralism for international tax cooperation has been a key feature of the international tax workflow. Building and achieving consensus goals on multilateral tax reform priorities, including tax administration capacity building and improving tax transparency, is a clear contribution of India’s G20 presidency to the “further global benefits” envisioned by our Prime Minister!
(Rasmi Ranjan Das is Chief Commissioner for Income Tax, Government of India and Uma Maheswari R is Additional Commissioner for Income Tax, Government of India. These are the author’s personal views.)