India to push for BEPS talks at G20 meet

India, keen to go ahead with a global tax pact to curb tax avoidance by companies, is expected to push for negotiations of some provisions of the OECD’s Base Erosion and Profit Shifting (BEPS) agreement at the meeting of heads of states of G20 nations to be held in Brisbane next week.

Officials said that formal negotiations would be conducted at a later date.

“We are fully committed to the BEPS pact. India does not have a confrontational stance but we feel that there should be more consistency and fairness in how to calculate the base erosion of a company,” said a person privy to the development, adding that other countries including the United Kingdom too have sought a re-negotiations of the international tax accord on various provisions.

Prime Minister Narendra Modi is scheduled to attend the two day G-0 Summit where heads of states of the grouping will finalise the Brisbane Action Plan. “There are no negotiations at the heads of states meeting. The leaders will sign the final G20 communique based on negotiations undertaken during the year,” explained a second official.

Former Union minister Suresh Prabhu, who will be Modi’s ‘sherpa’ at the Summit, had on Thursday said there will be a particular focus on steps to deal with BEPS, where globally operating firms shift profits to low or no-tax jurisdictions. Taxation of e-commerce may would also be discussed, he had said. “There will be a new platform, a new regime and common reporting standards,” Prabhu had said, while giving a broad overview on the G20 priorities at the summit. He had also announced that India has already circulated a position paper on the issue.

The BEPS initiative that was fully endorsed by the G20 Finance Ministers and Central Bank Governors at their July 2013 meeting in Moscow as well as the G20 Heads of State at their meeting in Saint-Petersburg in September 2013 aims to ensure that companies pay tax where profits are made. The Action Plan prepared by the OECD is expected to be implemented over the next 18 to 24 months.

A recent paper by think tank National Institute of Public Finance and Policy too had said that though the 15 Action Points outlined in the BEPS framework are important, they would address the root of the problem, which is the “skewed distribution of taxing rights against nations”.

The paper titled “Action Plan on Base Erosion and Profit Shifting: An Indian Perspective’, which has focused on the Action Points has however noted that a re-look at the allocation of taxing rights was not on the agenda of the OECD.


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