BEPS Current Affairs

Enter Your Email Address To Subscribe Current Affairs Daily Digest, Daily Quiz and other updates on Current Affairs:

Government notifies third Protocol amending India-Singapore DTAA

The Union Finance Ministry has notified hird Protocol amending India-Singapore Double Taxation Avoidance Agreement (DTAA). The agreement came into force in February 2017and was signed in December 2016.

The Third Protocol amends the DTAA between both countries to provide for source-based taxation of capital gains arising on sale of shares in a company.

Key Facts

  • The India-Singapore DTAA at present provides for residence-based taxation of capital gains of shares in a company.
  • The addition of provision of source-based taxation of capital gains in DTAA, will help to curb revenue loss, prevent double non-taxation and streamline the flow of investments.
  • It also provides certainty to investors, investments in shares made before April 1, 2017 subject to fulfilment of conditions in Limitation of Benefits clause as per 2005 Protocol.
  • Further, it also provides a two-year transition period from April 1, 2017 to March 31, 2019 during which capital gains on shares will be taxed in source country at half the normal tax rate.
  • It also facilitates relieving of economic double taxation in transfer pricing cases. It is a taxpayer-friendly measure and is in line with India’s commitments under Base Erosion and Profit Shifting (BEPS) Action Plan.
  • It also enables application of domestic law and measures concerning prevention of tax avoidance or tax evasion.

Tags:

India and Kazakhstan sign Protocol to amend DTAC

India and Kazakhstan have signed a Protocol to amend the existing Double Taxation Avoidance Convention (DTAC) between the two countries in New Delhi.

The DTAC between both countries was earlier signed in December 1996 for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.

Salient features of Protocol
  • Provides internationally accepted standards for effective exchange of information on tax matters. Further, allows tax authorities to share information with other law enforcement agencies with prior authorisation.
  • Limitation of Benefits Article has been inserted to provide a main purpose test to prevent misuse of the DTAC and to allow application of domestic law and measures against tax evasion or avoidance.
  • Specific provisions to facilitate relieving of economic double taxation in transfer pricing cases also have been inserted.
  • It is a taxpayer friendly measure and is in line with India’s commitment under Base Erosion and Profit Shifting (BEPS) Action Plan to meet standards of Mutual Agreement Procedure (MAP) access in transfer pricing cases.
  • Service PE (PE provisions) provisions also have been inserted with a threshold and the profits to be attributed to PE will be determined on the basis of apportionment of total profits of the enterprise.
  • It replaces existing Article on Assistance in Collection of Taxes with a new Article in order to align it with international standards.

Tags:

BRICS nations to share tax information automatically to eliminate tax evasion

The BRICS (Brazil, Russia, India, China and South Africa) countries have agreed  to  share tax information automatically as per their commitment to ensure the fairness of the international tax system.

Decion in this regard was taken at the meeting of Heads of Revenue of BRICS Countries in Mumbai, Maharashtra.

Key Facts
  • They have reaffirmed their commitment to prevent of base erosion and shifting of profits (BEPS), exchange of tax information and capacity building of developing countries.
  • To eliminate BEPS all member countries agreed to tax profits in those jurisdictions where the activities deriving those profits are performed and where value is created.
  • BRICS members will exchange tax information, both on request and on automatic basis, and to adopt global standards on tax transparency
  • They also reiterated their endorsement for global Common Reporting Standard for Automatic Exchange of Information (AEOI) on a reciprocal basis to prevent cross-border tax evasion.
  • Expressed “deep concern” with the process of erosion of the tax base by aggressive tax practices including incomplete disclosure of information by MNCs.
Background

The BRICS nations have faced major tax dodging by big corporate and individuals that diminishes their efforts to reduce societal inequality by taxation. US based think tank Global Financial Integrity has estimated that BRICS countries have faced huge flows of illicit fund flows in the last decade. BRICS member countries occupy five of the top seven places in the global ranking of countries for illicit outflows. China has been the biggest source of illicit fund outflows followed by Russia during this period.

Tags:

Advertisement