Arun Jaitley is a man who hits the ground running. He had only
been in office for six weeks when he delivered his first Budget
speech in July, but his entry into the Global Tax 50 2014 is
testament to the speed of impact he has had.
|Arun Jaitley is
a new entry this year
Just shy of seven months into his tenure, a tangible shift
is already apparent in the way that India is regarded by the
international business community. News of foreign direct
investment proposals and approvals is coming through on a daily
basis and in much larger volumes than just a year ago. And with
the IMF and World Bank forecasting a 5.6% growth rate for India
this year, rising to a predicted 6.4% in 2015, the seeds sown
by Jaitley are already beginning to bear fruit.
Sitting in its shadow as I wrote the editorial for
November's landmark 25th anniversary issue, I reflected on the
striking symbolism of Mumbai's uplit Gateway of India at a time
when the country is opening up to become a more positive and
business-friendly environment. The vibrant, colourful
opportunities that operating in India presents are now
front-and-centre in investors' minds, and the dimming effect of
fears over bureaucracy and regulatory uncertainty are
diminishing week-on-week. Jaitley's legal background working
with many large companies means he is in tune with the wants
and needs of the business community and by keeping those
insights in mind he has been able to influence corporate
mindsets both at home and abroad.
Indeed, much work has been done on the international
relations front, and tax and trade will remain a key aspect of
this evolution as Jaitley continues to exert his influence on
international tax issues into 2015 and beyond.
Here, International Tax Review's Matthew Gilleard
speaks with Jaitley about perceptions, progress and
International Tax Review: What do you consider to
have been your biggest achievement in taxation since you became
Finance Minister? Are you, for example, proud of the change in
perception that is taking place under your stewardship
(removing the label of India being a tough place to do
Arun Jaitley: In the limited time that has
elapsed since this government took over, we have taken a number
of measures towards establishing a predictable and
non-adversarial tax regime, where all stakeholders including
foreign investors can do their business without any tax related
pain. We have already put in place a concrete mechanism to
allay the anxiety about future actions under the retrospective
amendments and introduced amendments in the domestic laws to
make it more predictable for foreign portfolio investors. The
tax authorities have also responded by adopting a more focused
and rational approach towards tax litigation.
At the same time, we have also been active participants in
the G20 and OECD led new developments to curb aggressive tax
avoidance and evasion so as to ensure that our domestic
resource mobilisation is not compromised.
In this way, we have been reasonably successful so far in
making India a better place to do business. Yet, I must add
that is just the beginning and we are aiming at much more.
ITR: What is your priority from a business
taxation point of view at the moment?
AJ: My priorities are to reduce compliance
costs (including litigation) and make our tax laws and their
application as predictable as possible for businesses. In
international taxation, this may require alignment with
international standards in some areas. We are already
participating in the various projects initiated by the G20 and
OECD for this purpose.
For a developing country like India, it is important to
ensure the balance between providing an easy to comply and
predictable tax regime that would make it an investor friendly
place, while also protecting the revenue to which we are
legitimately entitled because of the economic activity
ITR: How far do you think the revenue authorities
and tax administration have come in terms of being
AJ: We can already see a change in the
attitude of our officers. We are working to further instill a
fair and justified approach in the authorities, while also
attempting to remove the ambiguities that can potentially lead
to protracted litigation. We have also moved forward in the
advance pricing agreement (APA) regime, which is expected to
curtail disputes related to transfer pricing. In my opinion, we
have taken the right steps in the right direction.
ITR: There is progress in some areas of agreement
between states and Centre on the goods and services tax (GST)
front and more progress is likely during the Winter Session.
How confident are you that implementation will occur in the
next year or two?
AJ: Yes, much progress has been made and
there is now agreement on many issues. We are working on
introducing the Bill for amending the Constitution in this
Winter Session of the Parliament, and we are targeting to roll
out GST by April 2016.
In the intervening period, our focus would be on having the
enabling legislation for GST enacted in the states and the
Centre, and also developing a robust IT infrastructure across
all states for the implementation of GST.
ITR: Is there any other message you would like to
give to the global tax community right now?
AJ: I would like to take this opportunity
to convey to the investors and business community that the
Government of India is fully committed to improving the tax
environment in India, and we are already working on it.
I would also like to highlight that we are aiming to bring
about further easing of tax compliance and address all genuine
concerns of business in this regard. We consider the business
and tax community as an important stakeholder in our progress
and would like to work with them for this purpose.