Finance Minister Nirmala Sitharaman on Tuesday made a strong case for enhanced international cooperation among tax jurisdictions to address the challenges posed by the digitalisation of the economy, new financial products, and complex beneficial ownership structures. Speaking at the plenary meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes, she also highlighted a significant rise in voluntary tax compliance within India in recent years.
The Imperative for Transparency and Trust
Sitharaman emphasised that transparency in tax matters is foundational for building trust and boosting taxpayer morale, which in turn supports the government's developmental goals. She argued that when individuals and corporations pay their fair share and evasion is curbed, societies become stronger and more equitable. This conviction, she noted, has been a guiding principle for India's legislative and enforcement frameworks.
"Public infrastructure, education, health services, and welfare programmes all depend on domestic resources," the Finance Minister stated. She pointed out that when national wealth escapes legitimate taxation, it creates not just a revenue shortfall but also a critical development gap, a phenomenon that hits developing nations particularly hard.
Leveraging Technology with Accountability
The minister detailed how the Indian government is utilising data received through international information exchange frameworks, combining it with broader compliance and risk analysis. She acknowledged the growing potential of technology and artificial intelligence to process information more efficiently and in a timely manner.
However, Sitharaman issued a crucial caveat: "The key is — it is judgement, responsibility, and an unwavering respect for procedure. Innovation must always walk hand in hand with accountability. It is that balance which gives systems strength and credibility." This statement underscored the need for a principled approach to adopting new tech tools in tax administration.
Adapting to New-Age Challenges
Echoing the minister's sentiments, Revenue Secretary Arvind Shrivastava, who also addressed the forum, stressed the need for robust data confidentiality systems. He emphasised that information shared under international standards must be used effectively to achieve its purpose.
Shrivastava called on global jurisdictions to adapt collectively to emerging challenges. He specifically identified the taxation of the digital economy and the implementation of reporting frameworks for crypto assets as key areas requiring urgent attention. These frontiers, he noted, will demand both technical innovation and coordinated international action to ensure a fair and transparent global tax ecosystem.
