'Mandatory norms needed to get information from MNCs'

Last Updated: Wednesday, April 3, 2013 - 18:20

New Delhi: The government needs to put in place norms that make it mandatory for multi-national companies to provide information as and when required by the authorities on issues related to taxation, according to a senior official.

"There is reluctance on the part of MNCs (Multi National Companies) to part with information. At times, it has been my personal experience (as a member of DGIT) that they part with information selectively...," Director General of Income Tax (International Taxation) Promila Bhardwaj said on Tuesday.

Citing the reluctance on the part of MNCs in sharing information, she said that there should be "mandatory norms, either through domestic legislations or through international platforms" in this regard.

"It should be made mandatory that MNCs come forward and give information as and when required... Which is many a time very very crucial," she said.

The comments come at a time when there are apprehensions of some MNCs dodging taxes by various means including aggressive tax planning.

Speaking at a conference on 'Financial Transparency: Challenges and Opportunities for Developing Countries' here, Bhardwaj said MNCs adopt various means to dodge taxes.

These include wrong characterisation of income, setting up of shell companies, trade mispricing, exploiting loopholes in tax laws and multi-layering of transactions, she added.

A recent study by UK-based NGO Christian Aid said many MNCs operating in India and having links to tax havens use profit shifting strategies to "evade" taxes.

"Our research, based on the analysis of financial and ownership data of almost 1,500 MNCs operating in India, strongly suggests that MNCs with tax haven links use profit shifting strategies to evade and avoid taxes.

"As a result, the government of India may have lost tax revenues that could otherwise have been used to invest in human development," Christian Aid said in a report released late last month.

PTI

First Published: Wednesday, April 3, 2013 - 18:20

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