BRICS nations, including India, pledged on Tuesday to share tax information automatically and adopt global standards on tax transparency to check cross border tax evasion.
The two day meeting of the heads of Revenue of Brazil, Russia, India, China and South Africa (BRICS) also resolved to support other developing nations in increasing their tax administrations’ capacity to implement the OECD/G20 standard on Automatic Exchange of Information (AEOI).
“We recognise the importance of the exchange of information between competent authorities in preventing cross- border tax evasion and we resolve to exchange information, both on request and on automatic basis, and to adopt global standards on tax transparency,” said the communique issued after the meeting.
Expressing “deep concern” with the process of erosion of the tax base by aggressive tax practices including incomplete disclosure of information by MNCs, the group reaffirmed its resolve to work together to address them.
“We acknowledge our common understanding that profits should be taxed in those jurisdictions where the activities deriving those profits are performed and where value is created,” it said.
They urged timely and consistent implementation of the Base Erosion and Profit Shifting Project across as many tax jurisdictions as possible and appealed to all countries to join the framework and participate in the BEPS project.
The OECD/G20 project on BEPS provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to artificially shift to low or no-tax environments, where little or no economic activity takes place.
They also discussed the potential areas of cooperation and exchange opinions and views based on their existing commitment to openness, solidarity, equality, mutual understanding, inclusiveness and mutually beneficial cooperation.
The 5-nation bloc expressed their continued support to all international initiatives towards reaching a globally fair and universally transparent tax system.
“They reiterated their commitment to actions taken to ensure the fairness of the international tax system particularly towards prevention of base erosion and shifting of profits, exchange of tax information and capacity building of developing countries,” said an official statement.
BRICS countries also discussed improving compliance through non intrusive means, issues arising out of implementation of BEPS action point 13 relating to Country by Country reporting and also the role of United Nations in becoming the voice of developing and emerging economies in setting international tax rules, it added.
The BRICS nations said they were aware of the challenges thrown by cross border activities and reaffirmed commitment to support such global initiatives aimed at intensifying international cooperation and enhancing tax transparency.
They also resolved to start exchanging information automatically with each other by 2018 and decided to cooperate closely to tackle any potential challenges that may delay the implementation of the OECD/G20’s Common Reporting Standard.
Reaffirming their continued commitment to promote closer cooperation on issues of mutual concern and common interest, the BRICS countries said they recognise the importance of the economic and commercial links among the member nations.
“We will continue to work towards developing a framework of cooperation between our administrations to contribute to the economic growth of the BRICS countries,” the communique said.