|Arun Jaitley was
also in the Global Tax 50
Arun Jaitley has pulled a hat-trick and remained in the
Global Tax 50 for the third year running for his continued
efforts to overhaul India's tax system and rid it of corruption
and opaque policies.
2016 has been a busy year for the Indian finance minister,
who has been moving forward with the planned goods and services
tax (GST) regime and phasing out corporate tax exemptions,
among other things. He has also been an important figure in
strengthening tax compliance and combatting tax avoidance and
evasion. "Moderate tax rates and evasion cannot coexist. When
we evade taxes, it also brings aberrations in tax structures,"
he said in August.
When he was first appointed as finance minister, Jaitley
told International Tax Review that his priorities for
business were to reduce compliance costs (including litigation)
and increase tax certainty. To date, Jaitley has fulfilled this
goal by introducing tax measures that align with international
standards and BEPS, as well as revising a number of tax
treaties and reducing the amount of available tax exemptions to
facilitate a future cut in the corporate tax rate.
To make India more competitive in the global market and to
drive investment, Jaitley has hinted at the gradual decrease in
the corporate tax rate to make it easier to do business.
Earlier this year, at the SP Jain Institute of Global
Management, Jaitley said that the Indian government had
resolved various legacy issues in regards to taxation and is
gradually working to bring down the rate from 30% to the more
standard global level of 25%.
In addition, the planned GST regime finally made some
progress after the upper house of parliament, Rajya Sabha,
passed the 122nd Constitutional Amendment Bill for GST on
August 3. The bill's passage has paved the way for the most
far-reaching tax reform ever to be implemented in India in
2017. Since August, a GST Council has been established, chaired
by Jaitley, which has agreed on a four-tier GST rates
structure. Other details still require agreement before a final
GST Model Law can be submitted to parliament.
For the GST to come into force in April 1 2017, India's
federal and state governments must pass the legislation by the
end of this year, but the regime could be stalled if the
federal and state officials fail to agree on who should
administer the tax.
Implementing GST in India has been a long and tedious
process that began back in 2003. Its introduction would allow
for a big reduction to compliance costs for manufacturers, and
would also mean the harmonisation of the varying taxes, both at
the federal and state level, applied to goods and services sold
across India. If GST is implemented, Jaitley is confident that
the tax rates will come down. When asked what his top economic
policy priorities were, Jaitley told a conference in September
that he was determined to stick to a "very stiff" schedule that
anticipates the implementation of critical enabling legislation
for the GST regime by the end of 2016.
Looking ahead, Jaitley is expected to turn his attention to
other prominent challenges that include putting public sector
banks back on track and re-booting stalled infrastructure
projects to further boost economic activity. His work in
re-shaping India's economy include initiatives like 'Make in
India', '100 Smart Cities' and the liberalised foreign direct
investment (FDI) regime to boost investment and trade. These
projects are a priority in Jaitley's infrastructure plan to
stimulate growth in the economy.
Another area of significant change in India has been the
move from bank notes to cashless transactions. Jaitley is
confident that physical currency must be phased out to expand
the economy. This is part of a larger objective to move towards
digitalising financial processes such as digital IDs, expanding
access networks and financial benefit transfers.
Jaitley is a firm believer of coordinated policy actions and
growth strategies, especially in light of globalisation and
multilateralism. His reoccurring position in the Global Tax 50
is due to his transformation of India's tax system. His ability
to foresee future issues within India's economic model has
allowed for the development of new initiatives like the GST
regime, and the momentum to kick-start work on stalled
While Jaitley continues his efforts to create a tax system
that competes with the international economy, taxpayers are
working to align their tax structures with new compliance
measures that promote fairer taxation. His efforts to improve
the tax landscape for businesses operating in India will help
to foster relationships with other countries and provide
various opportunities for business.