The OECD, a grouping of rich countries, has agreed to put out a paper that would set out the possibilities for countries like India to get past banking information through bilateral tax treaties or multilateral agreements.
India has been lobbying hard with developed countries to agree on a global mechanism where even past banking information is shared between countries for tax administration purposes.
“We have heard you. We are dealing with the issue.… Dealing it in a way I think where we will be able to achieve what your government wants — which is effective exchange of information,” Dr Jeffrey Owens, Director, Centre for Tax Policy and Administration, OECD, told Business Line here.
He highlighted that the issue of sharing past banking information was a “very technical issue”. There are legal issues in the sense that one also has to respect what the existing agreements provide for.
“The key thing is effective exchange of information. Our second round of peer review will look into the aspect of effectiveness. The first phase of peer review has already looked at the legal framework”.
Dr Owens also said that there will be an internal discussion within OECD and also at the Global Forum on the issue of exchange of past banking information.
OECD also plans to set up a Global Forum on Transfer Pricing and also one on VAT, Dr Owens said.
The forum on transfer pricing will look at whether the standards that exist today are adapted to the current business environment. A lot of emphasis would be on how to get globally consistent implementation, he said.
He also noted that the relationship between India and the OECD have developed very productively, especially in the last two years.
“The relationship is closest in the tax area. I have seen more progress in the last two years than the last two decades.”
India has a seat at the OECD tax committee. It also has a seat at the Global Forum.
“India's tax system is now much more business friendly, has much more effective tax administration, but you need to continue to adapt the system to reflect the economic realities of today.”