New Delhi: Noting that India’s international tax structure and the processes have been in line with the bricks and mortar model of businesses, the Central Board of Direct Taxes (CBDT) said the same needs to change to keep pace with times.
“A change in the international tax structure is the call of the hour. The process of globalising the tax aspect of our businesses is inevitable,” CBDT Chairman JB Mohapatra said at an event organised by the Federation of Indian Chambers of Commerce & Industry (FICCI) on Friday.
In view of tax challenges arising from digitisation of economies, India has joined members of the OECD/G20 Inclusive Framework in reaching agreement on the statement on a two-pillar solution to address them.
The framework agreement sets the way for multilateral collaboration for a just and fair world. The Base Erosion and Profit Shifting (BEPS) Pillar 1 and Pillar 2 are under dialogue and will come into place soon, making way for a clearer pathway on taxation front.
The market economies stand to gain from the level of revenues generated for a product sourced from outside, FICCI said in a statement here on Saturday. The CBDT Chairman pointed out that India’s revenue goals stands to gain from this exercise. “Pillar 2 alone can get USD 500 billion to India’s revenues,” Mohapatra said. He added that business opportunities were likely to increase going ahead.
Mohapatra further stated that dispute resolution remains a key challenge as tax officials will be working multilaterally.
“The future would depend on how strongly, comprehensively and clearly the guidelines and SOPs are drawn. We should be in a good stead as long as that is followed,” he said.
Speaking at the event, Dinesh Kanabar, CEO, Dhruva Advisors LLP said that a number of changes have been witnessed in the field on international taxation over the past few years and the speed at which these changes are being implemented is unprecedented. “The OECD has adhered to timelines, framing of rules and guidelines and has been relentless on this front – which is laudable,” he said at the virtual ‘International Tax Conference’ 2021.
