New Delhi
Experts feel
that India is likely to benefit from the global minimum 15% corporate tax rate
pact inked by the world's richest G-7 nations. It is a landmark step toward
reforming the global tax system. The pact by the Group of Seven (G-7) advanced
economies will be presented to the G-20 developing and developed nations in
July in Venice. India’s effective domestic rate is above 15% but tax experts
say the ability of the country to attract investment will keep it in a good
place.
The Finance
Ministers of the G-7 advanced economies – comprising the US, UK, Germany,
France, Canada, Italy and Japan, finalised a landmark deal of taxing
multinational companies (MNCs) at a minimum global tax rate of 15%. They have
also agreed to introduce measures to ensure businesses pay taxes in the
countries where they operate. This move is aimed at closing loopholes in cross-border
taxation.
The decision of
the G-7 nations will be presented to the G-20 group of developing and developed
nations in a meeting scheduled for July 2021 in Venice.
A statement
issued by Mathias Cormann, Secretary-General, Organisation for Economic
Co-operation and Development (OECD) mentioned that the agreement among the G-7
nations was a landmark step toward achieving a global consensus necessary to
reform the international tax system.
He added that
this decision gives the much-needed momentum to the upcoming discussions among
the 139 member countries and jurisdictions of the OECD/G20 Inclusive Framework
on base erosion and profit shifting (BEPS).
In September
2019, India slashed its corporate taxes for domestic
companies to 22% and taxes of new domestic manufacturing units to 15%. The
discounted tax rate was extended to the existing domestic companies, subject to
certain conditions.
Source – ET Auto
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