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Inaugural Address by Minster of State for External Affairs on the occasion of Third Annual Developing Country Forum organised by South Centre and RIS

December 10, 2019

Distinguished delegates, Ladies and Gentlemen,

  • It gives me immense pleasure to welcome you all to New Delhi for the Third Annual Developing Country Forum on the important theme of ‘South-South Cooperation in International Tax Matters’.
  • This Forum has emerged as an important international event consolidating the Global South’s voice in international taxation. I believe this is the first time this event is being hosted in India. Ministry of External Affairs is delighted to support RIS and South Centre and join Ministry of Finance in hosting this event.
  • India is one of the founding members of the South Centre, and has been supporting its activities and operations over the years. It is the only inter-governmental organization of countries from global South working in area of South-South cooperation. It assists developing countries to combine their efforts and expertise to promote their common interests in the international arena.
  • It is well placed to share experiences on good practice. South-South Cooperation has traditionally been an important pillar of India’s foreign policy and diplomacy. India is engaged with fellow developing countries in various forums such as India-Africa Forum Summit, India ASEAN Summit, India-CARICOM summit, BIMSTEC etc.
  • India’s technical support, training and institutional support through its ITEC (India Technical and Economic Cooperation) programme and through technology transfer are much valued by partner countries. India trains annually around 12000 professionals from various Departments from 161 countries in different fields.
  • This Forum is taking place at an important juncture as the global economy faces strong headwinds. Challenges in trade and investment are further complicating the overall economic outlook.
  • The major challenge confronting the developing countries is sustainable finance. As we all are aware, developing countries face fund crunch for their efforts towards achieving the SDGs, for which the requirement is close to USD 2.5 trillion annually. Effective international taxation can go a long way mobilising the required revenue and in supporting financing sustainable development.
  • Besides conventional taxation issues, new challenges are also emerging from digital economy, rise of e-commerce platforms, increasing cases of illicit financing, tax evasion and fugitive economic offenders which require necessary legal and technological interventions to minimize the threats faced by developing countries including India.
  • Stemming Illicit financial flows is a major challenge worldwide. The situation is especially challenging for African countries, as according to some reports Africa loses more than US$ 50 billion a year due to illicit financial flows, which exceeds the amount of ODA provided to Africa.
  • The Addis Ababa Action Agenda on Financing for Development calls for international cooperation to combat tax evasion and corruption to reduce opportunities for tax avoidance. The Agenda suggests that all companies, including multinationals, pay taxes to the governments of countries where economic activity occurs and value is created, in accordance with national and international laws and policies.
  • New sectors of economy such as digital economy would require different framework for taxation. The examples of certain digital companies which pay no taxes at all in some of the countries where they are resident, despite making billions of dollars in profits, are under discussion at many fora.
  • We need to ensure a level playing field where foreign players pay the same taxes as domestic companies do.
  • Finally, the issue of fugitive economic offenders need worth mention here. Massive outflows of money are happening from India and other developing countries. The major challenge is to extradite these offenders from the tax havens they take shelter.
  • PM Modi has raised this issue at G20 Summit in Buenos Aires in 2018, wherein he suggested a nine-point Action Agenda for action against Fugitive Economic Offenders. I understand that this issue is being considered seriously by G20.
  • In this regard, International Legal instruments like Multilateral Convention on Mutual Administrative Assistance in Tax Matters which provides for exchange of information and recovery of taxes need to be made more effective.
  • It is important that the discussions on international taxation are carried out in an inclusive manner and not only by few rich countries. This process should be taken forward at an inter-governmental tax body under the auspices of the United Nations.
  • I hope this conference which is structured systematically around some of the key pillars of developing country tax issues would provide interesting insights and solutions to the challenges mentioned above.
  • I congratulate RIS and the South Centre for organising this event in association with Ministry of Finance. I believe that this would help in addressing the challenge of inadequate capacity to handle the new tax issues in developing countries.
Thank you all.



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