By Express News Service

NEW DELHI: Claiming that the revision of bilateral pacts could be cumbersome, the Union Minister Piyush Goyal on Wednesday said that the Union Cabinet in a “historic” decision has approved signing of a multilateral agreement to deal with the issue of tax evasion. The minister said that following the Prime Minister Narendra Modi’s exhortation to the G20 meeting, a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting has been drafted, which India will ratify.

“The convention has been arrived at after long deliberations within the G20 and OECD. It will tackle the issue of profit shifting through tax planning strategies. Once it comes in force, the gaps in tax rules of different countries could not be exploited to shift the profit by companies,” said Goyal, while briefing the media after the Cabinet meeting, which was preseided over by the Prime Minister. Goyal added that there are more than 3000 bilateral treaties, which would not have been practical to attempt revise them and hence the government has decided to ratify the multilateral agreement.

“This is a historic decision of the Cabinet, as it will further curb the flow of the black money outside the country,” said Goyal. Incidentally, 100 countries, including India, have collaborated to draft the convention to deal with plugging in the gaps in tax rules, which are being exploited by the companies and individuals to evade taxes in the countries of their operations.