Operation to fight financial crime.
By Deepak Chitnis
WASHINGTON, DC: The US and India are teaming up on a joint effort to crack down on tax evaders, entering into an information sharing agreement that mimics the one the US recently entered into with Canada.
An Inter-Government Agreement was signed between the two nations, as India’s Income Tax and Central Board of Direct Taxes (CBDT) officials met to discuss the parameters of the partnership, eventually coming to terms on a Mutual Agreement Procedure (MAP). The MAP has been critical in resolving at least four tax evasion cases already, during the 2013 financial year.
The agreement allows for more open sharing of information regarding financial cases between the two countries, which both governments hope will allow law enforcement agencies to highlight and subdue fraudsters, financial criminals, and tax evaders.
The US has been gathering steam in its newly dedicated initiative into apprehending Americans who use off-shore bank accounts and exploit financial loopholes to keep money out of federal government’s hands; estimates say that such activities cost the IRS close to $100 billion annually, and now the US either has or is pursuing partnerships with some 50 countries to put a stop to tax evasion.
Two rounds of talks were held, the first of this kind after over a year of pause, and the agreement with India is said to be in line with the agreements being arranged with other countries under the US Foreign Account Tax Compliance Act (FATCA). Also being looked at is the Double Taxation Avoidance Agreement (DTAA), an Indian law that went into effect in 2009 with the US. Both governments are looking to improve the legislation’s protocols to essentially close potential loopholes that tax evaders may be using.
What should also be noted is that the two countries are coming together towards a common goal, after a difficult couple of months that have undoubtedly marred relations, despite comments Indian Ambassador to the US S. Jaishankar may have had last week. Although the US is pressing ahead with investigations into Indian industry and its solar program, the nations still amicably teamed up to fight financial crime, which is surely a healthy step for the future of the US-India relationship.
To contact the author, email to deepakchitnis@americanbazaaronline.com