As part of the government’s efforts to deal with the black money menace, it has set up a unit for exchanging information on tax evaders in India, Brazil and South Africa (IBSA). The electronic centre will help identify and share information on ‘abusive tax schemes’ and the persons who promote them in the IBSA countries.
Abusive tax schemes are those transactions that are designed to reduce or defer taxation. According to a finance ministry official, the government would identify emerging trends to anticipate new abusive schemes. Besides, the unit will be useful in tracing black money flow in these countries and get information in a speedy and accurate manner. It would also facilitate sharing of expertise, best practices and experiences in tax administration to combat abusive tax schemes.
IBSA is a trilateral grouping that aims to promote South-South cooperation and exchange. Currently, India has Double Taxation Avoidance Agreements (DTAAs) with Brazil and South Africa. Recently, top revenue officials of the three countries met in the capital to set up the unit.
“The competent authority in each country would nominate an authorised representative, who would have officials under him for bilateral exchange of information. Meetings of these officers will be held on a regular basis in the three countries by rotation,? the official added.
The Indian government is facing intense pressure from the civil society activists, opposition parties and also from the Supreme Court on the issue of black money allegedly stashed away by some Indians in tax havens . India has revised DTAAs with 40 nations so that banking and other tax-related information can be shared with these countries.
Recently, India has revised DTAA with Switzerland so that banking and tax-related information could be shared between the two countries from April 2011. In May, the government had constituted the panel to look into strengthening of the law to curb black money generation. The committee will submit report in November.