Exchange of Information for Tax Purposes

1. S. 423Introduction

In the present age of globalization, which has witnessed a substantial increase in cross-border trade and investments, a paradigm shift in the quantum and pattern of cross-border flow of investments across territories has taken place. Taxpayers have become increasingly mobile, often moving across borders for making strategic investments all around the globe and expanding their business. The dismantling of trade barriers and free movement of capital for the creation of a single market in the European Union has contributed to the increase in international transactions to a large extent. Availability of modern technology for high-speed communication has also facilitated these moves and investments. Although this has resulted in economic prosperity providing immense opportunities to taxpayers to expand their business and create wealth all around the globe, it has also provided numerous possibilities to dishonest taxpayers to indulge in international tax evasion. The era of globalization has also witnessed a trend toward money laundering and parking of money in tax havens and other preferred jurisdictions to avoid detection by the tax authorities of the residence countrie...