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BRICS have released a joint communique after a two-day meeting of the heads of revenue expressing concern over the abuse of tax avoidance treaties.
The BRICS group including India, China and Russia pledged to enhance mutual cooperation to prevent erosion of revenue.
“We agree to extend the cooperation on the following issues of tax policy and tax administration, including development of a BRICS mechanism to facilitate countering abusive tax avoidance transactions, promotion of effective exchange of information,” said the joint communique issued on Friday.
The BRICS countries, it said, expressed concerns at the erosion of the tax base by practices that involve abuse of tax treaty benefits, incomplete disclosure of information and fraudulent claims.
A commitment was made to address these concerns by preventing the base erosion and profit shifting through mutual cooperation, the communique added.
The nations also vowed to strengthen the enforcement process by taking appropriate actions for non-compliance and putting more resources on international cooperation, sharing of best practices and capacity building to deal with cases of profit shifting by way of complex multi-layered structures.
The countries agreed establish a governance framework by May, 2013, in accordance with the overall BRICS commitment to continue the process of cooperation in tax administration.
During the two-day meeting, the officials deliberated on issues of mutual concerns related to tax administration, including those pertaining to international taxation, transfer pricing, cross border tax evasion and avoidance, tax dispute resolution mechanisms.
The communique also expressed an agreement amongst BRICS Countries for working together towards capacity building, improvement of systems and sharing of resources, and aims at extending it to the area of tax administration in a way that will benefit the people of BRICS Countries.
BRICS also agreed to come out with a paper on issues of mutual benefit, which includes erosion of the tax base by practices that involve abuse of tax treaty benefits and profit shifting through cooperation amongst them and with other countries.
The meeting, the first of its kind, was inaugurated by Indian Finance Minister Palaniappan Chidambaram yesterday. It was attended by Brazil federal revenue secretary Carlos Alberto Freitas, Russia’s federal tax service deputy commissioner Aleksey Overchuk.
China commissioner of state administration of taxation Xiao Jie and South Africa’s commissioner Oupa Magashula also attended the meeting.
Source: Agencies
