New Delhi, Jan 28 (PTI): In a significant step, Mauritius will soon start automatically sharing of tax information with India and other countries as part of global efforts to curb multinational companies from profit shifting activities.
The development also comes months after the island nation, long perceived to be a jurisdiction for alleged illegal fund flows into Indian shores, agreed to revise its bilateral tax treaty with India to address the concerns.
Along with Mauritius, six other countries signed the Multilateral Competent Authority Agreement for Country-by- Country Reporting (CbC MCAA), bringing the total number of signatories to 57, OECD said in a statement on Friday.
India signed the agreement in May last year.
Paris-based think tank Organisation for Economic Cooperation and Development (OECD) said the agreement is part of “continuing efforts to boost transparency by multinational enterprises (MNEs)”.
Apart from Mauritius, Gabon, Hungary, Indonesia, Lithuania, Malta and the Russian Federation have now signed the pact.
The CbC MCAA allows signatories to bilaterally and automatically exchange country-by-country reports with each other, as contemplated by Base Erosion and Profit Shifting (BEPS) Action Plan.
“It will help ensure that tax administrations obtain a better understanding of how MNEs structure their operations, while also ensuring that the confidentiality and appropriate use of such information is safeguarded,” OECD said.
BEPS refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.
Under the inclusive framework, over 100 countries and jurisdictions are collaborating to implement the BEPS measures and tackle such instances.
In May 2016, India had signed with Mauritius the revised Double Taxation Avoidance Convention (DTAC), in a bid to prevent “abuse” of the tax avoidance treaty.
The island nation is a major source of foreign direct investments coming into India.
Meanwhile, OECD said information on the activation of exchange relationships under the MCAA would be released in due course.