parameters to measure inter nationalization of tax authorities

7/31/2019 Parameters to Measure Inter Nationalization of Tax Authorities

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PARAMETERS TO MEASURE INTERNATIONALIZATION OF TAX

AUTHORITIES

A. Basic internal and control system of tax administration :-1. How far there is an access to the information compiled by the tax administration.2. Is there any database which is secured and updated relating to the taxpayers.3. How efficient and accurate is the system of tax-administration.

B. Higher concern for equity than maximization of collectionBasically the administrator should concentrate more on educating the tax-payer and

increasing the database of the tax-payers. They should not enter into harsher methods for

recovery and collection of tax for example search and seizure.

C. Formalization and standardization of co-operative allianceThere should be a development of operational practices to implement the co-operative

compliance model. For eg; the development of withholding tax system.

D. Migration to web-based interactive processIn India Income Tax, Service Tax, Excise Tax departments have already moved to web based

systems, which helps filing of returns, rectification of application and payment of taxes which

in turn facilitates payment of taxes. Even VAT departments of many states have gone online

to facilitate procedural aspect of tax collection. In GST the entire system shall be on-line.

E. Client Focus

The tax department shall be more focussed to providing services to the tax-payers and giving

priority to their clients.

D. Tax Form Information Strategy

The tax administration should involve comprehensive return forms in which complete and

detailed information may be provided to facilitate deep-computerised audits and analysis of

data provided by the taxpayer, this would further help in profiling of taxpayer.

E. Participation in shaping of legal framework.

There are a number of shareholder interested in development of law related to taxation, like

professional societies, Bar Association, tax administrators and other professional bodies. This

parameter measures the participation of tax administrators in development of legal

framework. In India, most of the amendments are based on the inputs provided by the tax

administrators and research wings of ministry. The representation of other stakeholders are

rarely taken into consideration.


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F. Development of Knowledge organisation.

In India the most prominent organisation for development of knowledge is the tax academy at

Nagpur. It imparts training to the newly recruits and subsequently runs various programmes

which are in nature of continuing professional development.

G. Networking in society for imparting knowledge.

In this parameter we measure various public and private institutes working in the society for

development of legal knowledge amongst the peer groups.

H. Deepening of Risk Analysis

In this parameter we measure that weather the administration has developed a system which

covers all risks to the tax system. The various risks involved in a tax system are

Tax payer risk Sectoral risks Corruption risks

As far as corruption risks are concerned the various tax departments in India have appointed a

tax ombudsman who settle the grievance of tax-payer and a specialised vigilance department

is also there, which is working directly under the Chief Vigilance Commissioner.

I. Other Parameters

- Horizontal Equity

- Better Compliance levels from International players In India two main systems are

followed for compliance by international players.

With-holding tax (TDS) Representative assessee. Any non-resident may file his return through representative

assessee or if he fails to perform his obligation then the Assessing Officer may treat a

person to be representative assessee. As far as collection is concerned the recovery

can be made from any asset belonging to the non-resident available in India and if that

asset is insufficient the recovery can be made at any time in future when any assetbelonging to that non-resident would come within the purview of India.


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TAX HEAVENSMEANING AND FEATURES

Sovereignty vis-a-vis right to tax

The most important issue involved in international taxation is the problem of double taxation

and tax sovereignty. Each country being a Sovereign nation tries to exercise its full power to

tax. Right to tax includes deciding tax structure, tax rate and the basis of charge. The

countries try to tax the global as well as national income of their nationals and national

income of foreigners. This gives rise to the problem of double taxation. This problem of

double taxation is resolved by evolving DTAAs to some extent. But the problem of tax

heavens cannot be removed by this process, because each country being sovereign has full

right to reduce its taxes for attracting foreign investment.

Harmful Tax competition vis-a-vis tax heavens

Tax competition is a healthy process which is promoted by all the economists world over,

because it attracts investment in one jurisdiction and further leads to economic development.

Tax competition usually involves lowering the tax rate, giving specific exemptions to certain

incomes along-with other benefits like lower corruption rate, good governance and due

process of law.

This competition gets harmful when it tends to ruin the economy of other jurisdictions. Tax

heavens have certain additional parameters like

Bank secrecy Opacity No information exchange with other jurisdiction

Parameters of Tax Heavens

The OECD gives three important parameters to judge a tax heaven :-

1. Lack of transparency2. Existence of law or such administrative procedures which prevent effective exchange

of information.3. That no substantial activity is required by that jurisdiction.

Apart from OECD US government has also laid certain parameters to judge the jurisdiction

as tax heaven.

1. All above2. Nil or nominal tax


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List of tax heavens

There is no exhaustive or final list prepared by any organisation throughout the world. Some

examples of tax heavens are

Switzerland Cayman Islands UAE Former 12 colonies of the British Crown.

Kinds of tax heavens

There are 2 kinds of tax heavens

- Co-operative-

Non Co-operative.

Before 2000 there were 31 countries were marked as non-co-operative tax heaven and after

2003 there were only 7 as rest complied with International Best Practices and after 2007 no

more country is listed as non co-operative tax heaven.

Benefits to tax heavens

Investment and employment.

parameters to measure inter nationalization of tax authorities

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