Even as there is a commitment on the swift implementation of the OECD-G 20 Two Pillar International Tax Package preferably in the first half of 2023, one perception is that the discussions on this will be not only complex but also contentious. Tarun Bajaj, the former Revenue Secretary at the Ministry of Finance noted that New Delhi has emerged as the leading voice and a pioneer in the realm of taxation of crypto across the globe and has been one of the key players in pushing for an inclusive framework in the negotiation for a consensus.
The first major event of the G 20 in 2023 was the meeting of the Finance Ministers and Central Bank Governors in Bengaluru recently. There is a lot of debate in the international economic community on the pros and cons of the Two Pillar solution to address the tax challenges resulting from the digitalisation of the economy--the Two Pillars ensuring that multinational enterprises(MNE) will face a minimum tax rate of 15 per cent and that profits of the largest and most profitable MNEs will be re-allocated to countries worldwide.
Bajaj was one the prominent tax experts on the finer aspects of a multilateral tax deal to participate in the US-India Tax Forum, an initiative of the US-India Strategic Partnership Forum (USISPF) in New Delhi. With developing countries becoming more prominent as a result of their growing GDP and more voices with different interests coming forth, the former senior Finance official stressed the need for re-negotiation in the discussions. “… it would make India’s presidency at the G20 highly memorable if Pillars 1 & 2 of the Global Tax Deal come into play this year but it does not take away from the fact that the discussions will be complex and contentious”, Bajaj is said to have remarked according to a press note issued by the USISPF.
Pascal Saint-Amans, a former senior official of the OECD who chaired the New Delhi conclave argued that “India’s focus should be on providing tax certainty before anything else because it has a bad reputation in this regard. I believe that it is better than providing incentives as they prove to be a waste of money and space in the long run”, with Akhilesh Rajan, former Member of the Central Board of Direct Taxes and Advisor of Price Waterhouse noting that the world has changed by the rise of regional groupings and hence the importance of consensus.
“Tax is an issue, opportunity and challenge that needs to be discussed further. Ease of doing business has been one of the key priorities of the Indian government. Foreign investors often find it hard to navigate the tax labyrinth in India. The US-India Tax Forum over the years has worked towards both advocating a business-friendly tax environment, as well as helping investors understand the nuances and frameworks that exist while keeping the Government’s objectives in mind, Mukesh Aghi, President and CEO of USISPF said.
Ms. Shweta Kathuria, Director, U.S.-India Tax Forum said, “Through the US India Tax Forum’s Conclave we gained a deeper perspective into the global tax deal which global economies are looking to implement over the next few years. With negotiations on multilateral tax treaty now largely focused on a two-pillared approach taken by the OECD (Organization for Economic Co-operation and Development), it was insightful to understand both Indian and global perspectives.”
According to Rasmi Ranjan Das, a member of Indian Revenue Service, it is not that India, the United States and Saudi Arabia are blocking Pillar One but that everyone in the G 20 agrees for a consensus. India’s silence on Pillar Two is not an oversight but a conscious decision “ and that while one awaits its reaction, it is important to remember that India was never against Pillar 2 in any case”, Das has been cited in the USISPF release.
The US-India Tax Forum is a specialized platform of the USISPF that allows policy makers of India, global tax experts and the business community to engage and advocate a tax environment that is conducive to making India an attractive investment destination.
Discussions on Two Pillar international tax package will be complex and contentious...Tarun Bajaj
