India To Sign Tax Pacts With ASEAN Members

by Lorys Charalambous, Tax-News.com, Cyprus

04 September 2006

The government of India is proposing to sign trade and tax treaties with countries in the Association of South East Asian Nations (ASEAN) bloc, in addition to Thailand and Sri Lanka.

Inaugurating the Associated Chambers of Commerce and Industry of India (Assocham) International Tax Conference last week, Dr Parthasarathi Shome, advisor to Finance Minister Palaniappan Chidambaram, stated that the trade and tax treaties aim to harmonise India's international tax system with the ASEAN countries, to resolve trade issues and boost trade flows.

The ASEAN membership currently comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

Dr Shome also revealed that the government is contemplating a joint audit for multinationals operating in India and ASEAN to monitor their annual statements. This exercise would be conducted in collaboration with India's state government, to monitor discrepancies in information reported on balance sheets between different authorities.

According to the Finance Ministry official, the government wants to model its cross border tax administration on that of Singapore, which is less bureaucratic than other countries in the region.

India already has a Closer Economic Co-operation Agreement with Singapore.

Dr Shome also announced that the Finance Ministry has completed the ground work for the new Income Tax Act and the draft report will shortly submitted to the Finance Minister.

However, he ruled out any incentives for export of capital from domestic industries to their overseas destinations, saying that "it made no sense" for the Indian government to offer incentives for its capital to be exported.

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