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India slips in OECD ratings on exchange of tax info

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In a set of peer review reports released by Organisation for Economic Co-operation and Development (OECD), India has slipped from a rating of ‘compliant’ to an overall rating of ‘largely compliant’ in meeting international standards for exchange of tax information.

What is Peer Review Report?

Peer review is a mechanism under which each country’s policy in a particular area is critically assessed by fellow members on pre-determined parameters.

  • From this mechanism, government of the country being reviewed can gain valuable insights from its peers on what has worked and what has not worked for them.
  • Utilising these insights in a constructive way can save time as well as financial resources.
  • OECD’s peer review of transparency and exchange of information of a country is conducted at regular intervals by officials representing other countries to check the implementation of the OECD-stipulated standards in this area, which helps combat offshore tax evasion.

Highlights of India’s Peer Review Report for exchange of tax information:

This peer review was conducted for the period July 1, 2013 to June 30, 2016.It has been suggested that Indian tax authorities should ensure the quality of the exchange of information (EoI) requests sent to foreign tax authorities and should carry out efficient communication with its EoI partners for all cases.TAX

  • In the previous peer reviews, parameters of ‘quality of information exchange requests sent by India to other countries’ and ‘availability of information relating to beneficial ownership in India’ were not taken into account.
  • India has been rated ‘largely compliant’ on both these new parameters which has pulled down its overall rating to ‘largely compliant’.
  • However, it has been outlined that India has shown improvements in the quality of its requests since 2015.
  • Besides, Central Board of Direct Taxes (CBDT) is also implementing an action plan for 2017-18, under which tax officials are provided training in drafting EoI requests.

India’s Peer Review Report Card for exchange of tax information:

Parameter Rating in 2017
Exchange of Information mechanisms and confidentiality Compliant
Quality and timeliness of exchange of information Largely Compliant
Availability of accounting and banking information Compliant
Availability of ownership and identity information Largely Compliant