Nirmala Sitharaman urges G20 to work on non-financial asset data sharing

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NEW DELHI : Finance Minister Nirmala Sitharaman on Thursday urged G20 leaders to put in place a framework for automatic exchange of information on non-financial assets to control tax evasion and ensure that the proposed global tax framework of the digital economy protects the interests of developing countries.

Speaking at the G20 Ministerial Tax Symposium in Bali, Sitharaman said the automatic sharing of non-financial asset information between countries was important to control tax evasion, as tax evaders create different layers of subsidiaries to store unaccounted for wealth in non-financial assets in offshore jurisdictions.

Sitharaman said investigations have shown that many layers of entities are often created by tax evaders to hide their unrecorded assets. While the existing automatic exchange of information framework provides for the sharing of financial account information between various jurisdictions, tax evaders are exploring other ways to transfer their unaccounted-for wealth by investing in non-financial assets, said The Minister. The minister urged the G20 to make it an action point.

“While development of the crypto asset reporting framework is underway, I call on the G20 to consider the feasibility of automatic exchange of information regarding other non-financial assets beyond those covered by the standard. joint declaration (on the automatic exchange of information), as well as real estate,” the minister said.

Sitharaman also urged the G20 to integrate countries that are not currently part of the automatic exchange of information into this system for the sake of tax transparency. The minister said that while more than 100 countries have committed to exchange financial account information under common reporting standards, some jurisdictions have yet to start exchanging information under it. This system, the minister said, can strengthen the global effort against offshore tax evasion and evasion.

Regarding the proposed global tax framework comprising a new digital economy tax regime and a global minimum corporate tax rate of 15% which are currently being debated by G20 and OECD countries, Sitharaman said that t was necessary to ensure that developing countries were able to participate in the negotiations.

“I call on the G20 inclusive framework to support the active participation of all members in finalizing the technical aspects of the two-pillar solution (digital economy tax regime and minimum 15% corporate tax plan) , so that we can ensure a more equitable, sustainable and inclusive tax system that translates into meaningful revenues for developing countries,” Sitharaman said.

The Minister’s suggestion for meaningful revenue for developing countries is important because current proposals on taxing the digital economy could bring India less revenue than the country currently receives through a digital economy tax. equalization on digital economy services.

“In crafting these rules, the concerns of developing countries must be taken into account,” the minister said, explaining that input from developing countries must be included in the formula because it affects them.

The Digital Economy Tax Framework proposes to grant taxing rights to countries like India that are markets for global tech giants with no physical presence. India wants the rules to be fair.

OECD Secretary-General Mathias Cormann, who also spoke on the occasion, said that while progress has been made on the draft global tax agreement, there are still issues to be ironed out.

“While we have seen solid progress, challenges remain to ensure that all members of the Inclusive Framework can progress together,” Cormann said. According to the media, Hungary resisted the global minimum tax agreement.

“We all understand the importance of ensuring that international tax agreements are efficient, effective and fair and we understand the importance of working closely on an equal footing with all countries, including developing countries. , to reform international tax agreements,” Cormann said.

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