The issue of tax evasion is a never ending topic. The recent intergovernmental initiatives between India and US like Enhancing collaboration in tackling offshore tax evasion and increased cooperation in sharing of cross border tax information are in news to prevent tax evasion. The issue has gained momentum after the recent panama paper leak and governments around the world are taking serious steps to tackle this issue.
To evade tax, to own property abroad in fake names, and to transfer money through easy channels are the prime reason why people stash money abroad. With huge money in illicit form they are not just creating various problems like Money laundering, drug trafficking etc but also creating detrimental scenarios to the economies around the world. With recent agreement between US and India like BEPS or Base erosion and profit shifting, has a potential to act as a very good dampener for tax evaders.
Tax evading firms or people will not comply the proper information sharing with their governments. The absence of proper legal frame work and increased tax rate among countries is prompting such tax evasion to happen.
The scenario of tax rate in India is relatively high compared with other countries of the world. India is having one the highest corporate tax rate of 30 percent and at the individual level tax is levied as low as 20k. However in the recent budget the finance minister has vowed to decrease the tax rate and increase the tax base. Rationalisation of tax structure is the need of the hour.
With new revelations about tax evasion the world is heading towards a new path of framing laws which is more rationale and compliant. India being a developing country cannot afford to let people evade tax at unimaginable levels. The world forum should come together to fight against such issues which not just avoids tax but also prevent other crimes like drug trafficking, sponsoring non state actors for terrorism, money laundering, illegal arms etc.
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