Tax Evasion Current Affairs - 2019
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Both India and the US will sign an agreement to facilitate the exchange of country-by-country (CbC) reports filed by the ultimate parent corporations based in either of the countries.
Base Erosion and Profit Shifting (BEPS) has been at the focus of OECD to address Tax evasion. Multinational companies were accused of gaming tax systems to maximise profits, while potentially depriving tax authorities of revenue.
To address this issue one of the measures adopted by OECD is Country-By-Country Reports. The Country-By-Country Reports requires multinational companies to provide information about:
- The name of each country where it operates.
- The names of all its subsidiaries and affiliates in these countries.
- The performance of each subsidiary and affiliate, without exception.
- The tax charge in its accounts of each subsidiary and affiliate in each country.
- Details of the cost and net book value of its fixed assets in each country.
- Details of its gross and net assets for each country.
Section 286 of the Income-tax Act, 1961 requires Indian subsidiaries of multinational companies to provide details of key financial statements from other jurisdictions where they operate. This provides the I-T Department with a better operational view of such companies, primarily with regards to revenue and income tax paid.
The proposed agreement will enable both India and the US to exchange CbC Reports filed by the ultimate parent entities of International Groups in the respective jurisdictions. As a result, Indian constituent entities of international groups headquartered in the USA, who have already filed CbC Reports in the USA, would not be required to do local filing of the CbC Reports of their international groups in India and vice versa.
The Central Board of Indirect Taxes and Customs (CBIC) has constituted three working groups to suggest ways to facilitate exports, especially through e-commerce, and improve compliance by way of curbing tax evasion. The Working Groups would study and recommend measures to facilitate trade, promote exports and improve compliance.
Mandate of Working Groups
- Export promotion and facilitation with emphasis on boosting exports through e-commerce by addressing the trade facilitation barriers faced in India’s export market.
- Recommend the ways for improving the quality of logistics services for exporters.
- Enhancing compliance, plugging loopholes to improve customs revenue collections and curb Integrated GST (IGST) refund frauds.
- Improving the legislative structure of customs tariff and update it to suit the emerging and future needs of the economy and industry.
- Creation of a comprehensive export tariff structure to enhance India’s export competitiveness.
The working groups will consult stakeholders, including export promotion councils, and submit the report within two months.
Central Board of Indirect taxes
Central Board of Indirect Taxes and Customs (erstwhile Central Board of Excise & Customs) works under the Department of Revenue under the Ministry of Finance, Government of India.
The board is vested with the responsibility of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST and Narcotics to the extent under CBIC’s purview.
The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissionerates and the Central Revenues Control Laboratory.
Tags: CBIC • Central Board of Indirect Taxes and Customs • Department of Revenue • e-commerce • export competitiveness • Export promotion • IGST • logistics services • Ministry of Finance • Tax Evasion