New Delhi: In a move aimed at ensuring that multinational corporations don’t get away without paying taxes anywhere, India and China joined a club of countries that agreed to automatically share information, laying bare the structure of operations of these companies.
Apart from the two Asian countries, Canada, Iceland, Israel and New Zealand also signed the Multilateral Competent Authority agreement for the automatic exchange of Country-by-Country reports (“CbC MCAA”), bringing the total number of signatories to 39 countries.
The agreement was signed as part of the global initiative called Base Erosion and Profit Shifting that is meant to ensure that MNCs do not get away without paying taxes. Several international giants including Apple, Google and Starbucks are among companies that are seen to be indulging in aggressive tax planning to minimise their burden. Companies resort to multi-layering of their operations and use tax treaties in what government sees as denying them their share of revenue.
“It will help ensure that tax administrations obtain a complete understanding of how multinational enterprises structure their operations, while also ensuring that the confidentiality of such information is safeguarded,” OECD Centre for Tax Policy and Administration said in a statement.