Sunday, July 21, 2024

Info exchange helps countries in Asia spot €20 bn extra in tax

New Delhi: Asian nations participating in a global tax transparency network have identified at least €20.1 billion in additional revenue since 2009, according to a report released on Thursday.

A report released by the Asia Initiative of a platform founded by the OECD, the Global Forum on Transparency and Exchange of Information for Tax Purposes, said that the commitment to information exchange and tax transparency is growing among participating countries. Currently, 17 countries are part of the Asia Initiative.

At least €20 billion of additional revenue in terms of tax, penalties and interest has been identified, an official statement from the Asia Initiative said on the first day of a two-day meeting in New Delhi co-chaired by revenue secretary Sanjay Malhotra.

A report titled ‘Tax Transparency in Asia 2023’ released by the grouping said that tax evasion and other forms of illicit financial flows (IFFs) are a global problem that hinders domestic resource mobilization, undermines the credibility of tax systems, and results in significant revenue loss for governments.

Curbing tax evasion and illicit financial flows is therefore critical to achieve the development goals of the 2030 agenda for sustainable development.

India believes more work is needed in enhancing tax transparency to combat offshore tax evasion. “As the G20 president, India is of the view that tax evaders may also utilize avenues to park unaccounted funds into immovable property in foreign jurisdictions and hence, a feasibility study should be conducted on the development of an exchange of information framework in respect of immovable property transactions, with emphasis on acquisitions after a cut-off date and above an agreed monetary threshold,” the report said, quoting Rajesh Kumar Bhoot, joint secretary, Central Board of Direct Taxes.

The authorities are increasingly relying upon automatic exchange of information and mutual administrative assistance in tax matters to tackle the issue.

Fiscal pressures on national governments after the pandemic are also giving momentum to the crackdown on tax evasion and cross-border flow of illicit funds.

Exchange of information among tax authorities has gained momentum in recent years with various investigations bringing the spotlight on the menace of aggressive tax avoidance by corporations, money laundering, tax evaded funds getting stashed away in off shore jurisdictions and in some cases, making its way back to the home country in the form of investments.

“Tax transparency has been a critical tool to address these serious issues, with concrete impact on domestic resource mobilization. At the core is the regional and global co-operation between tax administrations, which ensures the cross-border exchange of information relevant for tax purposes,” the report said.

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