Database to check global transactions

Database to check global transactions

To start with information available with the apex regulatory and enforcement bodies like Sebi, RBI and ED may be collated, according to the proposal mooted by a panel constituted by the Central Board of Direct Taxes to look into abuse of tax treaties through tax haven nations.
The committee has suggested to have a complete database combining all the informations available with Reserve Bank (RBI), Foreign Investment Promotion Board (FIPB), market regulator Sebi, Financial Intelligence Unit (FIU), and the Enforcement Directorate (ED).

“The committee formed to examine the Investigation Issues in Abuse of Tax Treaties and Tax Havens Development has suggested database of international transactions, Tax Avoidance Schemes involving tax havens, FIPB, Sebi, FIU, RBI and ED data to start with,” said a Finance Ministry official.

The panel has said India should work on the lines to have a mechanism like AUSTRAC in Australia to gather and process all the information relating to tax havens.
“There is the need for AUSTRAC–like mechanism (Australian) for gathering and processing information relating to tax havens,” the official said.
Australian Transaction Reports & Analysis Centre (Austrac) is an anti-money laundering and counter-terrorism financing regulator and a specialist in financial intelligence.

The suggestions from the panel assumes significance as India is working to evolve a system where the tax treaties it has with various nations is not misused to avoid tax in India. The country has double taxation avoidance treaties with about 76 nations such as Mauritius. Companies and individuals, in a bid to avoid payment of taxes in India use these treaties by routing their investments in India through these nations which are usually low tax or nil tax nations. The committee has also suggested other legal and anti- tax evasion measures.

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