|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 priorities.
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 business)?
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 happening here.
ITR: How far do you think the revenue authorities and tax administration have come in terms of being non-adversarial?
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.
|The Global Tax 50 2014|
|View the full list and introduction|
|Gold tier (ranked in order of influence)|
1. Jean-Claude Juncker 2. Pascal Saint-Amans 3. Donato Raponi 4. ICIJ 5. Jacob Lew 6. George Osborne 7. Jun Wang 8. Inverting pharmaceuticals 9. Rished Bade 10. Will Morris
Silver tier (in alphabetic order)
Joaquín Almunia • Apple • Justice Patrick Boyle • CTPA • Joe Hockey • IMF • Arun Jaitley • Marius Kohl • Tizhong Liao • Kosie Louw • Pierre Moscovici • Michael Noonan • Wolfgang Schäuble • Algirdas Šemeta • Robert Stack
Bronze tier (in alphabetic order)
Shinzo Abe • Alberto Arenas • Piet Battiau • Monica Bhatia • Bitcoin • Bono • Warren Buffett • ECJ Translators • Eurodad • Hungarian protestors • Indian Special Investigation Team (SIT) • Chris Jordan • Armando Lara Yaffar • McKesson • Patrick Odier • OECD printing facilities • Pier Carlo Padoan • Mariano Rajoy • Najib Razak • Alex Salmond • Skandia • Tax Justice Network • Edward Troup • Margrethe Vestager • Heinz Zourek
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