India presses for automatic exchange of tax information at G-20

WASHINGTON: Worried over the spurt in cross border transactions and tax evasion, India has pressed for automatic exchange of information among the countries to deal with the menace.

"India believes that Automatic Exchange of Information is one of the most effective ways to improve voluntary tax compliance and decrease tax evasion and there is a need to make it obligatory," Finance Minister Pranab Mukherjee said at the meeting of G-20 Ministers.

The G-20 nations, a grouping of rich and developing countries, he said, should impress upon tax havens and those believing in banking secrecy not to give such exemptions that neutralise the efficacy of global Convention on tax matters.

The Multilateral Convention on Mutual Administrative Assistance provides member countries mutual administrative assistance in tax matters.

"To make the Convention really effective, the G-20 should give a call that the Convention is signed by Offshore Financial Centres and countries traditionally believing in secrecy of bank laws and that country should not give exemptions which will eclipse the efficacy of the Convention," Mukherjee said.

With the relaxation of foreign investment policies, he said, "there has been a great increase in cross border transactions which bring into focus issues of tax evasion and illicit flows that pose serious challenges to the world economy".