TAX CONVENTION: OECD WANTS INDIA TO SPEED UP RATIFICATION

The OECD, a grouping of wealthy nations, hopes that India would go in for quick ratification of the Multilateral Convention on mutual administrative assistance in tax matters—a multilateral agreement that is now being seen as the `gold standard' for co-operation in tax administration. The multilateral convention covers all taxes (both direct and indirect taxes), all forms of exchange of information and provides for assistance not just in the assessment of tax but also in the actual collection, according to Mr Jeffrey Owens, Director, Centre for Tax Policy and Administration, OECD. G20 countries are moving from bilateral to multilateral agreements. At the recent G20 leaders summit at Cannes, India had along with 12 other G20 countries associated with this convention. India has already signed a letter of intent and now quick ratification is required, Mr Owens told Businessline here today. Mr Owens and senior OECD officials had a bilateral meeting with the Finance Minister, Mr Pranab Mukherjee and his top officials here today. The discussions included the action points arising from the recent G20 Summit at Cannes, progress made by India in extending their tax agreements with so called tax havens or bank secrecy jurisdictions, transparency on tax incentives offered by India and the benefits of Goods and Services Tax (GST) implementation. In a global economy, where high networth individuals and multinational enterprises operate in many jurisdictions,it is now being recognised that bilateral agreements may be inadequate to address multilateral issues, Mr Owens pointed out. As many as 34 countries have already signed the multilateral convention on mutual administrative assistance on tax matters. - www.thehindubusinessline.com

GOOGLE INDIA GETS I-T NOTICE

GOOGLE INDIA GETS I-T NOTICE

Around the same time Telecom Minister Kapil Sibal was planning to pull up Google,the Income-Tax Department was giving the final touches to a tax demand on the Indian arm of the global search engine company.Google India Pvt Ltd,according to the tax office,has not offered its entire income for taxation and the profit and loss account filed by the company does not give complete picture of the businesses.The department has questioned Google Indias practice of paying tax on its net income from advertisements,after crediting a sizeable amount as distribution fees to Google Ireland.Google India runs the Adwords programme whereby advertisements that appear on its website are sold in India to Indian business establishments.Tax officers have built their argument on the basis of the contract between Google India and Google Ireland.As per this,Google India is conducting the business and obtaining revenue from Adwords programme on its own account.This,according to the I-T departments interpretation,makes Google India a separate entity that should declare its full income for tax purpose, said a person who is aware of a tax assessment order that was served on Google India this week.For the assessment year 2008-09,the order says Google India has admitted revenue of only.Rs.7.49 crore instead of showing the correct revenue of.Rs.167.32 crore.Besides,no tax was deducted at source against the amount credited to Google Ireland.Based on the tax on the gross income and TDS,the department has made a claim of.Rs.74 crore for the year.Google India spokesperson did not reply to a text message and an email query from ET.The firm is learnt to have told the department that there is no omission in accounting of the revenue and the transaction with Google Ireland is at arms length and adequate documentation has been maintained to substantiate this. - www.economictimes.indiatimes.com