India is first non-OECD country to join tax convention

India has signed a multilateral convention on mutual administrative assistance in tax matters to become the first non-OECD and non-Council of Europe country to become its member, the finance ministry said Friday.

By signing the convention, India and the other 33 signatories encourage more countries to join, sending a strong signal that countries are acting together to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place, the finance ministry said in a statement.

The 34-member Organisation for Economic Co-operation and Development (OECD) is a grouping of most of the advanced economies, mostly from Europe.

The agreement “provides extensive forms of co-operation among the signatories on all taxes”, the statement said.

In a bid to trace the billions of dollars of black money stashed abroad, India has joined many multilateral forums in the recent months.

The agreement not only facilitates the exchange of information, but also provides for assistance in the recovery of taxes.

“This will give a fillip to the efforts of the government in bringing the Indian money illegally stashed abroad,” the finance ministry said.

The information received under the Convention can also be used for other purposes besides those related to tax co-operation, for example to counter money laundering with the approval of the supplying state.

Many more countries are expected to sign the Convention in future. This provides for a wider network of countries co-operating in exchange of information and assistance in tax collection. Out of the 34 signatories, only 13 have ratified the convention so far.