India to boost trade ties with US, commits to adopt FATCA soon

NEW DELHI: Committing to boost trade ties, India and the US today resolved to enhance cooperation, remove obstacles to investment flows and work towards early adoption of FATCA to facilitate automatic flow of tax information.

"We are committed to share our experiences in tackling offshore tax evasion and avoidance. We affirmed our shared commitment to fostering an enabling tax environment and expressed our satisfaction at the progress made in resolving tax disputes," said a joint statement issued after the 5th Indo-US Economic and Financial Partnership dialogue.

The two countries resolved to enhance cooperation on "facilitating capital market development conducive to financing greater investment into India, including in infrastructure, collaborate on measures that help foster an environment for greater investment into various sectors in India, and work together to overcome any obstacles to such investment".

On Foreign Account Tax Compliance Act, the two nations decided to work for an early adoption of the new global standards on automatic exchange of information on a fully reciprocal basis for getting information about unaccounted money hoarded in offshore jurisdictions and tax havens.

Under the FATCA regime, overseas financial institutions need to provide details about accounts held by Americans or foreign entities where the US taxpayers hold a substantial ownership interest, as also about all major transactions.

"We noted the need for an early conclusion of reciprocal arrangement on the Foreign Account Tax Compliance Act and look forward to working for an early adoption of the new global standards on automatic exchange of information on a fully reciprocal basis," the statement added.

If a financial institution does not comply to Foreign Accounts Tax Compliance Act (FATCA), it would have to pay 30 per cent penalty tax on all its US revenues, including dividend, interest, fees and sales.

Cooperation at global level is needed to check money laundering, Finance Minister Arun Jaitley told reporters after the dialogue.

The two countries decided to cooperate in a areas, including strengthening the financial sector, resolving tax disputes, combating illicit finance and facilitating long term investments through deepening of capital markets in India, US Treasury Secretary Jacob Lew said.

Lew said: "And over the last few years, we have seen significant progress. Trade between our countries has reached nearly USD 100 billion."