Washington: India and the US have agreed to enhance cooperation on tackling offshore tax evasion through information sharing and joint audits, while intensifying efforts to combat money laundering and terror financing.
Finance Minister Arun Jaitley, on the second day of his 7-day visit to US, met US Treasury Secretary Jacob J. Lew for the Sixth Annual US-India Economic and Financial Partnership (EFP) here yesterday and agreed to a dialogue by competent authorities on the two sides to raise engagement on tackling tax evasion.
The US also extended support to National Investment and Infrastructure Fund (NIIF) in a bid to help India raise resources and fund infrastructure growth, said a Joint statement after the meeting.
“We are committed to continued collaboration and sharing of experience in tackling offshore tax evasion and avoidance, including joint tax audits and tax examination abroad. We look forward to the Competent Authorities of the two countries engaging in bilateral dialogue to move forward cooperation in these areas,” it said.
The meeting was also attended by Federal Reserve Chair Janet Yellen and Reserve Bank of India Governor Raghuram Rajan among others.
“We have enhanced our cooperation in tackling money laundering and combating the financing of terrorism through increased information sharing and cooperation, including a dialogue held recently in India. We both agree on the importance of fighting illicit finance in all forms as an important means of tackling global terrorism,” it said.
The two countries noted the progress in sharing of financial information between the two countries under the inter-governmental agreement pursuant to Foreign Account Tax Compliance Act (FATCA).
“The two sides will continue to engage in discussions on full reciprocal arrangement on FATCA. We look forward to increased cooperation in sharing of cross-border tax-information,” the joint statement said.
During the meeting, Lew is believed to have appreciated Jaitley’s effort to successfully resolve more than half of the concerns related to tax disputes.
“Over the past year, our tax authorities resolved a significant portion of bilateral tax disputes between the United States and India,” the statement said.
The two leaders stated that tax authorities over the past years have resolved a significant portion of bilateral tax disputes between the US and India.
“In addition, our governments have begun to accept bilateral Advance Pricing Agreement applications by companies in both jurisdictions in an effort to enhance cross-border business processes and strengthen our commercial ties,” the joint statement said.
An expert staff from the US Treasury and India’s Ministry of Finance are having consultations on the US experience and international perspectives on the regulatory design for India’s recently launched payment banks.
Both the countries are working together to support NIIF in order to increase financing options for India’s infrastructure growth.
“We look forward to continuing discussions in areas such as municipal finance under the future work of the Initiative. The next meeting of the Investment Initiative will be in the United States later in 2016,” the statement said.
The Treasury and the Ministry launched Economic and Financial Partnership in 2010 as a framework commensurate with the growing importance of economic relationship and the significant business and cultural ties that already exist between the two nations.
The meeting between Jaitley and Lew took stock of the efforts that have been undertaken by both sides to deepen mutual understanding, and to improve cooperation across a wide range of bilateral and multilateral issues.
“We reiterated that the US-India partnership will be one of the defining relationships of the 21st century,” it said.
Earlier this year, US-India Financial Regulatory Dialogue brought together respective financial regulators to discuss a range of issues pertinent to our domestic financial sectors and to financial stability, including banking sector reform and development of capital markets.
Under the US-India Investment Initiative launched in January last year, the two governments have worked in collaboration with private sector to identify specific policies, regulatory reforms and technical collaboration aimed at mobilizing capital from both domestic and foreign investors to build infrastructure and create jobs.
With public debt management being an area of focus for India, it believes in continued efforts for more efficient debt and cash management as well as the development of a deeper and more robust domestic debt market.
“It presents an opportunity for India’s Ministry of Finance and the US Treasury’s Office of Technical Assistance to engage in knowledge and information sharing in India’s government debt management program. Accordingly, a Terms of Reference was signed between the two to collaborate on India’s government debt program,” the joint statement said.
The two also committed to further deepen our understanding of each other’s economies.
“As partners and peers, we are committed to working together to collaborate in multilateral fora, such as the G20, to steer our economies toward stronger, sustainable, and balanced growth. Under the aegis of our Economic and Financial Partnership, we held a sub-cabinet level discussion among our Deputies in India in early 2016,” it added.