BRICS nations to share tax information automatically to eliminate tax evasion

The BRICS (Brazil, Russia, India, China and South Africa) countries have agreed  to  share tax information automatically as per their commitment to ensure the fairness of the international tax system.
Decion in this regard was taken at the meeting of Heads of Revenue of BRICS Countries in Mumbai, Maharashtra.

Key Facts

• They have reaffirmed their commitment to prevent of base erosion and shifting of profits (BEPS), exchange of tax information and capacity building of developing countries.
• To eliminate BEPS all member countries agreed to tax profits in those jurisdictions where the activities deriving those profits are performed and where value is created.
• BRICS members will exchange tax information, both on request and on automatic basis, and to adopt global standards on tax transparency
• They also reiterated their endorsement for global Common Reporting Standard for Automatic Exchange of Information (AEOI) on a reciprocal basis to prevent cross-border tax evasion.
• Expressed “deep concern” with the process of erosion of the tax base by aggressive tax practices including incomplete disclosure of information by MNCs.

Background

The BRICS nations have faced major tax dodging by big corporate and individuals that diminishes their efforts to reduce societal inequality by taxation. US based think tank Global Financial Integrity has estimated that BRICS countries have faced huge flows of illicit fund flows in the last decade. BRICS member countries occupy five of the top seven places in the global ranking of countries for illicit outflows. China has been the biggest source of illicit fund outflows followed by Russia during this period.

Month: Current Affairs - December, 2016