Worried over the spurt in cross border transactions and tax evasion,
India has pressed for automatic exchange of information among the countries to
deal with the menace.
“India believes that
Automatic Exchange of Information is one of the most effective ways to improve
voluntary tax compliance and decrease tax evasion and there is a need to make
it obligatory,” Finance Minister Pranab Mukherjee said at the meeting of G-20
Ministers.
The G-20 nations, a
grouping of rich and developing countries, he said, should impress upon tax
havens and those believing in banking secrecy not to give such exemptions that
neutralise the efficacy of global Convention on tax matters.
The Multilateral Convention
on Mutual Administrative Assistance provides member countries mutual
administrative assistance in tax matters.
“To make the
Convention really effective, the G-20 should give a call that the Convention is
signed by Offshore Financial Centres and countries traditionally believing in
secrecy of bank laws and that country should not give exemptions which will
eclipse the efficacy of the Convention,” Mr. Mukherjee said.
With the relaxation
of foreign investment policies, he said, “there has been a great increase in
cross border transactions which bring into focus issues of tax evasion and
illicit flows that pose serious challenges to the world economy”.
Speaking at the
Financial Action Task Force (FATF) Ministerial meeting here, Mukherjee called
for a transparent financial system and said that no country can alone meet the
threats of money laundering and terrorist financing.
“There is an ever
growing need for international cooperation to deal with these threats... We
hope the new standards will improve the domestic and international cooperation
amongst the agencies to combat these crimes,” he said.
Mr. Mukherjee also
called for a system that would prevent and detect the misuse of formal and
informal channels and also to determine the beneficial owners.
The FATF is an
inter-governmental body set up by the G-7 nations for creating global policies
and framework to combat money laundering and terror financing.
India became the 34th
member country of FATF in 2010 and Mukherjee is the first Indian minister to
participate in the conference.
Besides, at the
meeting of the G-20 Ministers, Mr. Mukherjee said the global financial system
continues to face a complex set of challenges.
“While some countries
and regions are recovering from the crisis of 2008, others are confronting
renewed turbulence. The uncertain and uneven recovery has led to calls in some
quarters to weaken financial reform initiatives,” he said.
Mr. Mukherjee further
said a coordinated regulatory response is essential to tackle the volatile
financial markets and anemic growth prospects worldwide.
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