Nagpur News: The practice of multi-national companies parking their profits in tax havens to evade or avoid taxes is a challenge for the I-T department and it should positively tackle these issues, President Pranab Mukherjee said here.
“More than three-fourth of business transactions of the multi-national companies is being done through their various units,” he said.
The basic objective of such units is to locate places where rate of taxation is low to evade or avoid tax, he said.
“Transfer pricing is one of the most complicated task which you (I-T officers) shall have to discharge and I have no doubt you will render excellent services to your motherland,” Mukherjee said as he complimented 115 passing out officers of the 65th batch of the Indian Revenue Service (IRS).
The batch had joined the portals of the National Academy of Direct Taxes (NADT) here, the alma mater of IRS (I-T) officers, in 2011 after clearing the civil services exam.
Mukherjee’s statement assumes relevance as India, along with a host of emerging economies of the world, is working towards a streamlined tax regime where the due revenue of a country is collected at the appropriate jurisdiction and the relevance of tax haven jurisdictions is negated to the least.
India is an active member of top economic bodies like the Organisation for Economic Cooperation and Development (OECD) and Financial Action Task Force (FATF) to realise these objectives.
The President said India has inked a number of Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreement (TIEA) which has made it easier to obtain banking information from a foreign country in cases of cross-border tax evasion.
“Some of the recalcitrant countries are now compelled to divulge information about tax avoidance and evasion, he said.