OECD Current Affairs - 2020

Cabinet approves Double Taxation Avoidance Agreement between India-Chile

Union Cabinet has approved the signing of Double Taxation Avoidance Agreement (DTAA) and Protocol between Republic of India and Republic of Chile. This will help in elimination of double taxation as well as prevention of fiscal evasion and avoidance with respect to taxes on income.

Major impact of DTAA Agreement and Protocol

It will facilitate elimination of double taxation between two nations. Moreover, a clear allocation of taxing rights between Contracting States by Agreement will provide tax certainty to investors and businesses of both countries. This will also augment the flow of investment through fixing of fees for technical services, royalties and the tax rates in source State on interest.

The Agreement and Protocol implements minimum standards and other recommendations of G-20 OECD Base Erosion Profit Shifting (BEPS) Project (or BEPS Project). The Agreement includes provisions such as a Principal Purpose Test, Preamble Text, a General Anti-Abuse provision along with a Simplified Limitation of Benefits Clause (SLBC) as per BEPS Project. This will result in curbing of tax planning strategies which exploit gaps and mismatches in tax rules.

Way Forward

The Implementation Strategy and Targets includes completing necessary formalities for bringing the Agreement and Protocol into force after the Cabinet approval. Implementation would be watched and reported by Union Ministry of Finance.

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International Energy Agency releases World Energy Outlook, 2019

The Paris based International Energy Agency recently released its report on World Energy Outlook. The Agency has projected that the installed solar power in the world will increase by 3,142 GW by 2040. According to the report, the currently the world uses 495 GW of installed solar power.

Highlights of the report

Oil demand will slow down after 2025 and the world will transit towards electric vehicles. However, the oil demand for the next decade will keep increasing with 85% of increase coming from the US. In African states, the gas and renewable sources will power the future energy. However, the demand for coal in these countries are still raising

The report says that at present the energy demand in the world is growing at the rate of 2% per year.

Climate Scenarios

There are three climate scenarios projected by the report for the future. It includes the Current Policy Scenario, Stated Policy Scenario and Sustainable Development Scenario.

According to Current Policy Scenario, the world will continue to function with the old regulations with energy demand rising at the rate of 1.3% by 2040. The Stated Policy Scenario is New Policy Scenario. Under this the report says that with the new policies that have been introduced by the governments, the energy demand will increase by 1% per year.

The Sustainable Policy Scenario is the most ambitious of all the scenarios. Under this, the report says that by aligning with Paris Agreement the global temperature will reduce by 1.5 degree Celsius.

IEA

IEA is an inter-governmental organization of OECD (Organization for Economic Co-operation and Development). the World Economic Outlook is the flagship publication of the agency.

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