New Delhi: Finance Minister Nirmala Sitharaman emphasized the need for international cooperation to deal with fugitive economic offenders who flee their countries to escape from the consequences of law.
Participating in the G20 Finance Ministers and Central Bank Governors meeting and associated events during June 8-9, at Fukuoka, Japan, Sitharaman informed about the fugitive economic offenders law passed by India which provides for denial of access to courts until the fugitive returns to the country.
This law also provides for confiscation of their properties and selling them off. She drew attention to the practice permitted by many jurisdictions, which allow economic offenders to use investment-based schemes to obtain residence or citizenship to escape from legal consequences and underlined the need to deal with such practices. She urged that closer collaboration and coordinated action were required to bring such economic offenders to face law.
Sitharaman noted the urgency to fix the issue of determining right nexus and profit allocation solution for taxing the profits made by digital economy companies.
Appreciating the significant progress made under the taxation agenda including the Base Erosion and Profit Shifitng (BEPS), tax challenges from digital economy and exchange of information under the aegis of G20, Sitharaman congratulated the Japanese Presidency for successfully carrying these tasks forward.
The Union Minister of Finance & Corporate Affairs noted that the work on tax challenges arising from the digitalisation of economy is entering a critical phase with an update to the G20, due next year.
In this respect, Sitharaman strongly supported the potential solution based on the concept of ‘significant economic presence’ of businesses taking into account the evidence of their purposeful and sustained interaction with the economy of a country.
This concept has been piloted by India and supported by large number of countries including the G-24. She expressed confidence that a consensus-based global solution, which should also be equitable and simple, would be reached by 2020.
Sitharaman welcomed the commencement of automatic exchange of financial account information (AEOI) on a global basis with almost 90 jurisdictions successfully exchanging information in 2018. This would ensure that tax evaders could no more hide their offshore financial accounts from the tax administration.
She urged the G20/Global Forum to further expand the network of automatic exchanges by identifying jurisdictions including developing countries and financial centers that are relevant but have not yet committed to any timeline. Appropriate action needs to be taken against non-compliant jurisdictions. In this respect she called upon the international community to agree on a toolkit of defensive measures, which can be taken against such non-compliant jurisdictions.