CBDT Manual on Exchange of Information

It is the experience of tax administrators across the world, that Multi-National Enterprises (MNEs) whose operations straddle the globe manage to reduce their average global tax liability quite easily to very low levels consistently simply by using or misusing provisions of  certain countries’ tax laws. This has become so commonplace that tax authorities of all major countries where value-adding activities are conducted by large MNEs have felt compelled to come together and join forces to address the erosion of their respective tax bases. This ‘collaboration’ is intended to stem the wave that moves a  disproportionate portion of global profits of MNEs away into no-tax or low-tax jurisdictions whose tax regimes feature one or more types of what have come to be known as ‘harmful tax practices’. These countries also compete with other countries for inward investments, but unlike the larger countries, they offer other benefits.  

With this as the backdrop, the Central Board of Direct Taxes has released a Manual on Exchange of Information to explain the provisions relating to Exchange of Information, and to provide guidance to Investigation Officers for making requests for information to another country. The manual also covers, in brief, other forms of administrative assistance under India's tax treaties.