[ad_1]
The Income Tax department is working to bring clarity and remove inconsistencies in international matters as cross-border transactions and business structures complicate tax administration, a senior tax official said on Wednesday.
The department is working with taxpayers and other stakeholders through its outreach programmes on the new Income Tax Act to identify areas where clarity and guidance are needed, said Monica Bhatia, principal chief commissioner of Income Tax (International Tax).
“It is a journey that we are trying to traverse together,” Bhatia said in New Delhi at an international conference organised by industry body Assocham.
The Supreme Court’s judgement in the Tiger Global matter, the new Income Tax Act, dispute-resolution mechanisms and technology were reshaping the international tax landscape. Substance, commercial rationale, policy stability and greater certainty remain important to investor confidence, she said.
“Policy stability is foundational to investor confidence,” she said, highlighting the government’s measures following the Tiger Global judgement to provide greater certainty to legacy investments. She cited the over 1,000 advance pricing agreements India had signed, including more than 220 bilateral agreements, noting that cooperation between taxpayers, professionals and the tax administration would be key to reducing tax disputes.
The department is examining areas where uncertainty and ambiguity persisted and working towards providing greater clarity in the interpretation and administration of international tax provisions.
Its focus is to ensure consistency in the way tax officers handle international tax matters, particularly as cases involving cross-border transactions and multinational businesses become more complex. Different approaches in similar cases can create uncertainty for taxpayers and potentially result in prolonged disputes.
Bhatia also highlighted the need to strengthen the capabilities of tax officers dealing with international tax issues. Greater guidance and specialised understanding would be important as officers increasingly deal with sophisticated business models, cross-border transactions and questions relating to the allocation of taxing rights.
The department is also adapting to the growing digitalisation of the economy, which has created new challenges for tax administrations globally. Digital businesses and increasingly complex cross-border operations require tax authorities to develop new approaches to assessment and administration.
Bhatia’s comments come against the backdrop of growing complexity in international taxation, with tax administrations globally seeking to balance enforcement with greater certainty for businesses.
The department’s approach will continue to evolve as it works with taxpayers, professionals and international counterparts to address areas where greater clarity is required, she said.
[ad_2]
Source link