BRICS join hands to address transfer pricing woes

The heads of the revenue of the BRICS countries - Brazil, Russia, India, China and South Africa – have identified seven areas of tax policy and tax administration for extending mutual cooperation in strengthening the enforcement processes.

A joint communiqué issued on Friday, at the end-of a two-day meeting, pledged to extend mutual cooperation in developing standards on international taxation and transfer pricing taking into account the aspirations of developing countries in general and BRICS Countries in particular.
The five BRICS countries agreed to cooperate in strengthening the enforcement processes, sharing of best practices and capacity building, sharing of anti-avoidance and non-compliance practices and promotion of effective exchange of information.

The BRICS countries also vowed mutual cooperation to address the problems like incomplete disclosure of information and fraudulent claims in order to prevent the erosion of the tax base and profit shifting.

BRICS countries will work together towards capacity building, improvement of systems and sharing of resources, knowledge and best practices and extend cooperation to the area of tax administration in a way that will benefit the people of BRICS countries. 

The heads of revenue of BRICS countries at their first meeting in New Delhi on 17 and 18 January 2013 discussed issues relating to international taxation, transfer pricing, prevention of cross-border tax evasion and avoidance, exchange of information, sharing of best practices in tax system administration and resolution of disputes.

The meeting agreed to extend cooperation on the following issues of tax policy and tax administration:

• Develop standards on international taxation and transfer pricing taking into account the aspirations of developing countries in general and BRICS Countries in particular;
• Strengthen enforcement processes by taking appropriate actions for non-compliance and putting more resources on international cooperation;
• Share best practices and build up capacity;
• Share anti-tax evasion practices and measures against non-compliance, including abuse of treaty benefits and shifting of profits by way of complex multi-layered structures;
• Developing a BRICS mechanism to facilitate countering   abusive tax avoidance transactions, arrangements, shelters and schemes;
• Promotion of effective exchange of information as also any other issues of common interests and concerns related to taxation; and
• Confronting non-compliance with the tax laws in an international context.

The communiqué recognises the importance of the economic and commercial links amongst BRICS countries and the need to contribute to the strengthening of these links.

BRICS finance ministers and central bank governors who met in Washington DC on 19 April 2012 had agreed to develop a cooperative approach on issues relating to international taxation, transfer pricing, exchange of information and tax evasion and avoidance.