India scores, G20 backs Modi on black money

Member countries agree to exchange info, amend global tax rules

BRISBANE: The G20 countries Sunday endorsed Prime Minister Narendra Modi’s concerns over black money, committing to modernise global tax rules and put in place a mechanism for automatic exchange of information by 2018.

The move comes at a time when the Supreme Court is hearing a matter on black money stashed by Indians in overseas banks. The government has already submitted 627 names of account holders to the court and a special investigation team (SIT) is probing the case.

Sunday’s push by G20 countries, which account for 85% of the world’s GDP and 90% of the global trade, will bolster India’s efforts at securing information from tax havens. Unofficial estimates of illegal money stashed abroad by Indians range from $460 billion to more than $1.4 trillion.

The Indian government called the outcome an “unprecedented success”. “India’s concerns on black money and tax avoidance have found an echo and have been taken on board the final G20 communique,” the Prime Minister’s Office tweeted.

On the second and final day of the G20 summit here, Modi reiterated need for close policy coordination among major economies, saying it was important not just for addressing the challenge of black money but also to battle terrorism, drug trafficking and arms smuggling.

In a communiqué, the leaders of the world’s 20 largest economies said, “We endorse the 2015-16 G20 anti-corruption plan that will support growth and resilience.”

To prevent cross-border tax evasion, the countries endorsed “the global common reporting standard for the automatic exchange of tax information on a reciprocal basis”.

Supporting exchange of information, Modi said it would be instrumental in getting data about unaccounted money stashed abroad and help bring it back.

Black money was a big issue in the 2014 Lok Sabha elections and Modi notified the SIT on his first day in office as part of a wider clampdown on corruption that he promised during the campaign.

The G20 anti-corruption plan seeks to ensure investments by corporates or individuals and their details are shared between developing and developed countries. It also calls on countries to ensure that information is shared between domestic and international agencies

The exchange of information would begin among the member countries and with other nations by 2017 or end2018. “My understanding is, it starts now and we will build up over the next couple of years,” G20 host and Australia’s Prime Minister Tony Abbott told reporters.

Modi also expressed the hope that base erosion and profit-sharing system (BEPS) would address concerns of developing and developed economies.

Better known as transfer pricing, BEPS refers to the effect of tax avoidance strategies used by multinational companies on a country’s tax basis.

Railway minister Suresh Prabhu, the PM’s sherpa or interlocutor for the summit, and exter nal affairs ministry spokesperson Syed Akbaruddin termed the outcome an “unprecedented success”. “We have achieved substantially or overwhelmingly all our goals, in terms of the outcomes of the communique,” Akbaruddin told the media. (WITH HTC INPUTS FROM

DELHI).