OECD: OECD and India to enhance tax cooperation

June 15th, 2011


PARIS – The OECD and India have announced plans to strengthen ongoing co-operation on tax-related issues through the development of a three-year partnership that will provide greater opportunities for structured dialogue and sharing of information.

The partnership, announced in New Delhi on 13 June by OECD Secretary-General Angel Gurría and Indian Finance Minister Pranab Mukherjee, will build on existing engagements and further enhance Indian participation in the OECD’s global initiatives.

The three-year programme will broaden existing technical cooperation on tax matters and extend high-level policy dialogue between India, other emerging countries and the OECD. It will also deepen India’s work within the OECD Committee on Fiscal Affairs and its subsidiary bodies, toward the eventual goal of becoming a full participant in the Committee.

The programme will cover a range of issues over the coming three years, including improving tax administration, adapting transfer pricing and tax treaty rules to the new international environment and better understanding of the linkages between illicit flows and tax evasion. It will also enable India to contribute to OECD work on Tax and Inequality, on the application of VAT/GST to cross border services and relating to aggressive tax planning and harmful tax practices.

“The phenomenal economic advances India has made in recent years and its growing integration into the global economy have exposed its tax policies to the same challenges facing the industrialised countries, notably how to adapt its domestic tax system and its international tax policies to a borderless economy, and how to ensure that the approaches embraced today will be well-suited to meet tomorrow’s needs,” said OECD Secretary-General Angel Gurría.

“Deepening the relationship between the OECD and India will allow us to offer Indian officials what we  have always offered our member countries:  a forum for sharing experiences and expertise,  for benchmarking national policies against best practices and jointly identifying solutions to commonly shared problems.  This high-level policy dialogue is the natural continuation of the cooperation that has grown up between India and the OECD over the past decade, and should demonstrate that we all have much to learn from each other,” Mr Gurría said (see full speech).

The new tax partnerships was launched in the margins of a 13-14 June high-level conference co-organized by the Indian government and the OECD. The conference, “Adapting Tax Systems and International Tax Rules to the New Global Environment: A Shared Challenged for India and the OECD,”  drew 170 officials from India and a dozen other countries, and featured a keynote address from Indian Finance Minister Pranab Mukherjee.

Participants explored some of the most complex challenges posed by the taxation of multinational enterprises in a global economy. Topping the agenda were transfer pricing questions that arise in relation to cross-border transfers of intangibles and the provision of services between members of multinational enterprises. These questions are of paramount importance to India, given the development of the country’s Information Technology industry and other high tech activities.

Discussions also covered innovative initiatives on the design and implementation of administrative structures to more effectively enforce transfer pricing legislation and promote better taxpayer compliance; to improve the prevention and resolution of cross-border disputes; and to provide greater certainty to taxpayers and governments.

India has been actively involved in the OECD Committee on Fiscal Affairs and its working parties since 2006. It plays a lead role in the Global Forum on Transparency and Exchange of Information for Tax Purposes and is an active member of the OECD’s multi-stakeholder Task Force on Tax and Development.

India recently become a full member of the OECD Network on Fiscal Relations Across Levels of Government, and will host a major conference in December 2011: the International Tax Dialogue Global Conference on Tax and Inequality.

Further information on OECD tax work is available here.

Written by Ryan Isakow

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