Reforms will focus on efficient tax administration: Shome

Parthasarathi Shome helped the UPA-II Government out of a jam caused by the controversial provisions of the General Anti-avoidance Rules (GAAR). He is now heading a panel to reform the national tax administration and suggest long-term roadmap for a policy direction. Business Line caught up with the taxation policy expert at an event organised by Bengal Chamber of Commerce. Excerpts:

Why would the Tax Administration Reforms Commission’s first report mainly focus on the administration’s internal processes?

The proposed reforms’ ultimate goal is to expand the tax base and taxpayers’ base. The reform begins at home. It is more about looking inward to correct anomalies and approaches of a system that increases compliance. The premise is that the tax administration has to be cost effective and efficient. The compliance cost for the taxpayers and administrative cost aspects have been reviewed. Suggestions are being made on administration’s productivity improvement through several process reforms.

We have been studying the existing organisational structure and systemic processes. The commission would also recommend detailed segmented changes.

The idea is to enhance administration’s capacity and skill base so that it can handle increasing tax base with greater efficiency, swiftness and lesser disputes.

The target is also to promote quality decision making at the tax policy level.

Will the measures to control tax or economic offences be the part of the second report?

We have not decided on that now. However, in four more reports, after the first, we plan to focus on other areas of tax administration. Suggestions would be there for using predictive analytical tools to prevent tax and economic offences. The commission would recommend functional measures to enhance information sharing among the enforcement agencies. Steps to improve cross border information exchange also would get the attention.

The Government’s position on the provisions General Anti-avoidance Rules and the related norms on indirect transfers are still ambiguous…

The final report on the indirect transfers had been submitted in October. The Finance Ministry has not uploaded the report on its Web site. The GAAR provisions have, however, not been implemented.

What is the future of double taxation treaties?

In my opinion, at the time of renewal, the treaty documents can plug the identified loopholes.

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