New Delhi, Sep 2 (IANS): Linking global capital flows to the UN's proposed Sustainable Development Goals (SDGs), Minister of State for Finance Jayant Sinha on Wednesday said India has pitched for a global tax regime to be built into the UN process.
"India stands at a profound moment tectonic change in the world where, while Official Development Assistance (ODA) globally is in the range of about $150 billion, capital flows leaving the developing world to richer parts through capital gains structures or illicit financial flows are estimated at between $400 billion to $600 billion," he said at a UNDP organised forum here on "Financing for Development and Post 2015 Agenda: Way Forward from Addis".
"That's why the consensus (at the recent Addis Ababa conference on International Financing for Development) was that we move towards the establishment and formulation of a global tax policy from an OECD process to a UN process because OECD process is dominated by rich countries where the developing world has less of a say," he said.
At the conference, India also represented the G77 countries and along with China, it reflected a strong and shared stand on the issues of international tax architecture where it disagreed with the Organisation for Economic Cooperative and Development (OECD), a club of rich nations.
Sinha said if one moves to a UN process on this with intergovernmental consultations there would be a more equitable and responsive tax policy for the developing world.
"After last-minute consultations with developed country representatives that it would be inequitable if they were not to move towards a UN mandated global tax policy," Sinha said.
In this connection, the government on Tuesday accepted the recommendations of the Justice A.P. Shah committee on the applicability of the vexed minimum alternate tax (MAT) on foreign institutional investors (FIIs), and said it has decided to effect an appropriate amendment to the Income Tax Act.
"Through the amendment the government proposes to clarify that MAT provisions will not be applicable to FIIs/FPIs (foreign portfolio investors) not having a place of business/ permanent establishment in India, for the period prior to April 1, 2015," the finance ministry said in a statement here.
"The committee has recommended that section 115JB of the Income Tax Act may be amended to clarify the inapplicability of MAT provisions to FIIs/FPIs," it added.
In the 2015-16 Budget, Finance Minister Arun Jaitley had exempted FIIs from paying MAT with effect from April.
Even after Jaitley's announcement, the Income Tax department sent notice to at least 90 foreign portfolio investors.
With the uncertainty created by MAT, foreign investors sold Indian shares and bonds of around $630 million on May 6, marking the biggest single-day sale since January 2014.