India pitches for coordinated action to deal with challenges in digitalisation, timely tax info exchange

India is urging global partners to unite against emerging economic challenges. Digitalization and new financial products like crypto require coordinated action. Finance Minister Nirmala Sitharaman emphasized the need for timely information exchange and strong data confidentiality. This collaboration aims to ensure fairness and public trust in tax systems worldwide. Technological advancements will aid in achieving these goals.

India on Tuesday called for global cooperation for coordinated action to deal with new challenges emanating from the digitalisation of the economy and the emergence of new financial products like crypto and stablecoins, and ensure the timely exchange of information among various jurisdictions.

Inaugurating the 18th Global Forum Plenary meeting, Finance Minister Nirmala Sitharaman said technological tools like artificial intelligence should be used to ensure that tax information is exchanged among jurisdictions, which will lead to measurable outcomes.

"Looking ahead, there are new challenges that call for joint attention. The digitalisation of the economy, the emergence of new financial products, and evolving structures of beneficial ownership require continued cooperation between jurisdictions. Confidentiality and cybersecurity must also be maintained with great care," Sitharaman said.

Stating that no country can address these challenges alone, the minister said, "They demand coordination, trust and timely exchange of relevant information".

Speaking at the Plenary meeting, Revenue Secretary Arvind Shrivastava said countries need to work towards ensuring strong data confidentiality systems and also make sure that information shared under international standards is used effectively.

He said jurisdictions, globally, must also adapt to new challenges, including digital economy taxation and crypto asset reporting frameworks, which will need technical innovation and coordinated action.

"Looking ahead...we must continue to deepen beneficial ownership transparency, ensure strong data confidentiality systems and make sure that information shared under international standards is used effectively," the secretary said.

Over the years, the Global Forum has enabled a transformation in the global tax landscape from banking secrecy and limited cooperation to transparency and information exchange, Shrivastava noted.

The Global Forum on Transparency and Exchange of Information for Tax Purposes is a multilateral framework, comprising 170 jurisdictions. It monitors and peer reviews the implementation of international standards on transparency and information exchange.

Sitharaman said tax transparency can be effective and fair when it is guided by clear rules, mutual respect and shared objectives.

Talking about India, Sitharaman said over the past decade, there has been a visible strengthening of voluntary compliance.

"This improvement in tax morale did not come from enforcement alone...Fairness and predictability, when demonstrated in practice, encourage participation far more effectively than compulsion. That lesson, we believe, holds relevance beyond national borders," the minister said.

Sitharaman called upon the Global Forum to deepen current standards where necessary and ensure that exchanged information translates into measurable outcomes.

"The focus must remain on fairness, sustainability and public trust in the integrity of tax systems," Sitharaman said.

She said technology and artificial intelligence offer opportunities to make sense of information in a timely and efficient way, but the key is "judgement, responsibility and respect for procedure.

"Innovation must always walk hand-in-hand with accountability. It is that balance which gives systems strength and credibility," Sitharaman said.
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Source: EconomicTimes
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