Multilateral Competent Authority Agreement Upsc

The fight against this transnational transfer of funds for prevention and tax evasion shows that national efforts are not enough to combat dirty money. It is therefore necessary to establish tax cooperation and exchange of tax information between countries. Many efforts are now being made around the world to promote the exchange of tax information. The G20 – OECD WORLD FORUM – has encouraged automatic exchange of information (AIA), the US-sponsored Foreign Account Taxpayer Compliance Act (FATCA), and many provisions under bilateral agreements to avoid double taxes are the biggest attempts. Amit Maheshwari, Partner, Ashok Maheshwary – Associates, a CA company, said that Indian tax administrators can have a complete understanding of how NCMs structure their operations and assume income and taxes. The confidentiality of this information is also preserved, as it is a channel fully channelled by the government for the exchange of information, he said. Other countries will also benefit from the signing of the multilateral agreement, he added. Transparency groups have reacted in different ways, and some criticize the fact that developing countries have not been considered and involved. [23] The collection and provision of information can be so costly and difficult for developing countries that it is not possible to participate in the regime. Instead of offering a period of non-reciprocity during which developing countries could simply obtain financial data, the only mention of non-reciprocal agreements is the reception of tax havens. [23] Information exchanged automatically is generally collected on a regular basis in the country of origin, usually through information on payments made by the payer (financial institution, employer, etc.).

Automatic exchange can also be used to transmit other types of useful information such as changing residence, buying or injunctioning real estate, VAT refunds, etc. As a result, the tax administration of a tax member`s country of residence can verify its tax documents to verify that taxpayers have properly reported their income from foreign sources. One of the important outcomes of these coordinated efforts is multilateral/bilateral agreements on the exchange of tax information, such as the Automatic Exchange of Information Exchange (AIA) jointly launched by the G20 and the OECD. Their goal is to combat tax evasion. The idea was based on the implementation agreements of the US Foreign Account Tax Compliance Act (FATCA), whose legal basis is the Convention on Mutual Tax Assistance. 97 countries have signed an implementation agreement and others intend to sign it at a later date. The first notifications took place in 2017, many of the others from 2018. Following the G20`s ratification of the global standard for the AIA, countries sign the Competent Competent Authority Agreement to implement information exchange.

The agreement specifies the information to be exchanged and when, as stated in the standard for the automatic exchange of financial information in tax matters.