Global Forum on Transparency and Exchange of Information for Tax Purposes [Current Affairs]

In the last few years, there has been a growing global concern about people not paying their taxes and moving illegal money across borders. In this context, there has been a development regarding the Global Forum on Transparency and Exchange of Information for Tax Purposes, of which you will read about in this article. This topic is relevant for the IAS exam economy, governance, and current affairs segments.

Global Forum on Transparency and Exchange of Information for Tax Purposes

• To address concerns of people not paying taxes and moving illegal money abroad, countries in Asia that are part of the Global Forum on Transparency and Exchange of Information for Tax Purposes, which is a group that works to promote fair taxation, have found at least €20.1 billion in extra revenue since 2009. 
• A report called ‘Tax Transparency in Asia 2023’ was released by the forum’s Asia Initiative, which shows that 17 countries are currently part of this effort to share information and be transparent about taxes.

Additional Revenue through Information Exchange:

• The Asia Initiative, a group of Asian countries that are part of the Global Forum on Transparency and Exchange of Information for Tax Purposes, have found at least €20.1 billion in extra revenue since 2009. 
• This is due to their efforts to reduce tax evasion and illegal financial transactions. 
• The goal is to improve domestic resource mobilization, strengthen tax systems, and increase government revenue. 
• These efforts are important to reach the development goals of the 2030 sustainable development agenda.

India’s Views on Enhancing Tax Transparency

• India, which is currently presiding over the G20, thinks that more efforts are necessary to improve tax transparency and fight against offshore tax evasion. 
• According to a report, officials from the Central Board of Direct Taxes stated that tax evaders might use various methods to store unrecorded funds in immovable property in foreign locations. 
• Thus, India suggests conducting a feasibility study to create a system that exchanges information about transactions of immovable property. 
• The system should focus on property purchases made above a certain amount and after a specific date.

Momentum to the Crackdown on Tax Evasion:

• Governments are combating tax evasion and illegal cross-border funds through measures such as automatic information exchange and mutual administrative assistance in tax matters. 
• The pandemic has increased the pressure on national governments to crack down on tax evasion and illicit funds. 
• Tax transparency is essential in addressing aggressive tax avoidance, money laundering, and tax-evaded funds hidden in offshore accounts. 
• Tax administrations’ regional and global cooperation facilitates the exchange of information needed for tax purposes.

Importance of Tax Transparency:

• Tax transparency is an important way to tackle problems like corporations trying to avoid taxes, illegal money laundering, and hiding untaxed money in foreign countries. 
• This is done by countries working together and sharing information relevant for tax purposes across borders.

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