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India notifies pact with US to check tax evasion by MNCs
Why is it in the news
- India has notified the inter-governmental agreement with the United States for exchange of country-by-country (CbC) reports.
- These CbC report will be those filed by multinational enterprises (MNEs) regarding income allocation and payment of taxes.
More in the news
- The agreement was signed by Central Board of Direct Taxes (CBDT) and US Ambassador to India in March.
- This agreement will enable both the countries to automatically exchange CbC reports filed by the ultimate parent entities of MNEs in the respective jurisdictions.
- A CbC report aggregates country-by-country information relating to the global allocation of income, taxes paid, and certain other indicators of an MNC.
- The provision was a part of the base erosion and profit shifting action plan, and later incorporated in I-T Act also.
- Base erosion and profit shifting:(1) Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.(2) Under the OECD/G20 Inclusive Framework on BEPS, over 125 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS.
Source
Indian Express.