By Snigdha Kalra
China was host to a meeting of the BRICS (Brazil, Russia, India, China and South Africa) nations, held to discuss matters of tax cooperation. The meeting was held from the 25th to the 27th of July, 2017, in Hangzhou, the capital of Zhejiang province in China. It was attended by the Heads of Revenue and Tax Experts of the BRICS nations. The highlight of the meeting was the signing of a Memorandum of Cooperation (MoC) with respect to tax issues. Moreover, the GST (Goods and Services Tax) reform of India was also praised.
An insight into the MoC
The BRICS Taxation Cooperation Memorandum (MoC), was signed at the meeting on Thursday, the 27th of July. Its main aim was to increase tax cooperation amongst the countries in a more institutionalized manner. The BRICS nations agreed to mutually exchange taxation information which would, in turn, help prevent cross-border tax evasion. They also decided to increase taxation capacity and coordinate the creation and implementation of taxation policies.
The role of BRICS nations in the world economy has been becoming more and more prominent. Their total share in the global economy is 23% today, which clearly shows that they are a force to be reckoned with. However, these countries also face internal difficulties as well as external conflicts amongst themselves. While China faces a debt problem, India is not far behind with its uncontrolled NPAs. In such a situation, the adoption of a cooperation pact, ahead of the 2017 BRICS Summit to be held in September 2017, goes a long way in strengthening the collective impact of the BRICS nations on the world stage.
The benefits to the taxation system of the five nations, including prevention of tax evasion, increased transparency due to sharing of financial information and possibly a coordinated taxation system, will provide an economic edge to the bloc over the world.
India’s apotheosis in tax reform
The country’s Revenue Secretary Hasmukh Adhia represented India at the meeting. On Friday the 28th July, the Finance Ministry said that India’s GST reforms were appreciated and hailed by the BRICS countries. The Goods and Services Tax (GST), a tax regime replacing numerous central and state taxes with a single tax, was implemented in India on 1st July 2017.
The representatives of the BRICS nations were inquisitive about GST. They believed that it was a major reform brought about by India and lauded the effort. And why not, for this is the first major tax reform in India since independence.
Adhia said that during the press conference after the meeting, the media also inquired about the reforms introduced in India. This goes to show that the reform agenda of the government is making waves in the world.
Impediments on the way
The BRICS National Security Advisors’ meet was held in Beijing on the 27th and 28th July. A major issue for India and China was the Doklam stand-off, a geopolitical conflict between India and China that occurred after China tried to build a road in the Doklam tri-junction region of Bhutan, China and India in June 2017. The National Security Advisor (NSA) of India, Ajit Doval, met Chinese diplomat Yang Jiechi to discuss problems in bilateral relations in light of this issue.
Talking about this meeting, Doval said, “It is great we are discussing vital issues that will have an impact on the next Summit meeting.” The next Summit meeting, to be held from the 3rd to the 5th of September 2017 in Xiamen, China, will see Indian Prime Minister Narendra Modi meeting Xi Jinping, the President of China.
The BRICS countries together are home to 42% of the world’s population. Therefore, the decisions of these nations have a major impact on the world. Their global role has also been increasing each year. The decisions taken at the various BRICS meetings, and the subsequent interactions at the BRICS Summit 2017, are certainly something that cannot be overlooked.
Featured Image Source: Visual Hunt
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