CABINET NOD FOR SIGNING OF CONVENTION ON BEPS

The Cabinet on Wednesday approved the signing of a multilateral convention to implement a tax treaty to check evasion, by preventing base erosion and profit shifting (BEPS).

Power Minister Piyush Goyal said the convention was an outcome of the OECD/G20 BEPS Project to tackle it through tax-planning strategies that exploit gaps and mismatches in rules to artificially shift profits to low or no-tax locations. The final BEPS project identified 15 actions to address it in a comprehensive manner.

The Cabinet on Wednesday gave its go ahead for signing of a multilateral convention to implement tax treaty to check evasion by preventing Base Erosion and Profit Shifting (BEPS).

Briefing reporters after the Cabinet meeting, Power Minister Piyush Goyal said the convention was an outcome of the OECD/G20 BEPS Project to tackle BEPS through tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or notax locations, resulting in little or no overall corporate tax being paid.

The final BEPS project identified 15 actions to address BEPS in a comprehensive manner. Implementation of the final BEPS Package requires changes to more than 3,000 bilateral tax treaties which will be burdensome and time consuming.

In view of the same, the convention was conceived as a multilateral instrument which would swiftly modify all covered bilateral tax treaties (Covered Tax Agreements/CTA) to implement BEPS measures. For this purpose, formation of an Ad-hoc Group for the development of such multilateral instrument was endorsed by the G20 Finance Ministers and Central Bank Governors in February 2015.

India was part of the Ad Hoc Group of more than 100 countries and jurisdictions from G20, OECD, BEPS associates and other interested countries, which worked on an equal footing on the finalisation of the text of the Multilateral Convention, starting May 2015. The convention has been opened for signature as on December 31, 2016 and a first joint signing ceremony is scheduled to be held in Paris on June 7. The Cabinet also approved the signing and ratifying of an agreement between India and Tajikistan on cooperation and sharing of Intelligence in the area of Customs. The agreement will help in availability of information for the prevention and investigation of Customs offences, an official statement said. It is also expected to facilitate trade and ensure efficient clearance of goods traded between the countries.

Meanwhile, the Cabinet Committee on Economic Affairs, which was held before the Cabinet meeting, approved a programme for development of bio pharmaceuticals through industry-academia collaboration entailing investment of ~ 1,500 crore by it over a period of five years. The programme will focus on development of specific products such as vaccines, biotherapeutics, medical devices and diagnostics, an official statement said.

The Cabinet also gave its nod to the maternity benefit programme providing ~6,000 each to lactating mothers, but restricted the scheme to firstborns only. “A pregnant or lactating woman having her first child will get up to ~ 6,000. Of this, ~ 5,000 will be given by the women and child development ministry in three instalments,” Goyal said.