Multilateral Instrument (MLI)
7-Jul-2017: Mauritius keeps tax treaty with India outside purview of MLI
Mauritius has notified 23 of its tax treaties for modification by OECD’s Multilateral Instrument (MLI) to implement tax treaty-related measures to prevent Base Erosion and Profit Shifting (BEPS). However, it has kept its double taxation avoidance treaty with India out of the purview of the global agreement that seeks to prevent companies from avoiding taxes. The move to exclude India is expected to address the concerns of overriding impact of MLI on the revised tax treaty between India and Mauritius.
Mauritius’ move to keep the bilateral tax treaty with India outside the covered agreements for MLI would mean that the terms of MLI would not apply to any transaction entered between tax residents of India and Mauritius. This also indicates that the tax treaty related BEPS measures will not impact investments in India routed through Mauritius, particularly the grandfathering of investments provided through the amendment to the bilateral tax treaty in May 2016.
The multilateral instrument (MLI) is a legal instrument designed to prevent Base Erosion and Profit Shifting (BEPS) by multinational enterprises. BEPS refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. The MLI allows jurisdictions to transpose results from the OECD/G20 BEPS project, including minimum standards to implement in tax treaties, to prevent treaty abuse and “treaty shopping”, into their existing networks of bilateral tax treaties in a quick and efficient manner. It was developed through inclusive negotiations involving more than 100 countries and jurisdictions, under a mandate delivered by G20 Finance Ministers and Central Bank Governors at their February 2015 meeting. The OECD is the depository of the MLI and is supporting Governments in the process of signature, ratification and implementation.
South Asia Sub-regional Economic Cooperation (SASEC)
12-Jul-2017: Cabinet approves SASEC Road Connectivity Investment Program - Tranche 2
The Cabinet Committee on Economic Affairs has given its approval for upgradation and widening of 65 kms of Imphal-Moreh Section of NH-39 in Manipur at a cost of Rs. 1630.29 crores.
Manipur being a landlocked state with almost 90% of the area under difficult terrain presently has only road transport as a means of mass transport system within the state. Hence development of the road infrastructure is of paramount importance to improve connectivity and progress of the State and to ensure that the administrative set up reaches the isolated and remote habitats. The project will improve connectivity between Imphal with the eastern part of the state. Based on the existing and projected traffic requirements the NH-39 will be widened to 4 lane between Lilong village and Wanginj village, while the stretch between Wanginj village to Khongkhang will be upgraded to 2 lane with paved shoulder.
The project is being developed with ADB's loan assistance under the South Asian Sub-Regional Economic Cooperation (SASEC) Road Connectivity Investment Program which aims at upgradation of road infrastructure in Bangladesh, Bhutan, Nepal and India (BBIN) in order to improve the regional connectivity among BBIN nations. The project corridor is also a part of the Asian Highway No. 01 (AH01) and acts as India's Gateway to the East. Thus trade, commerce and tourism in the region will get a boost.
Background
For fulfilling India's "Look East" Policy and to promote and enhance trade link with South East Asia, the Government of India has notified an Integrated Custom Post (ICP) at Moreh. The development of this project is essential in order to support the increased traffic volume due to coming up of ICP. The workers of Manipur who specialize in creating bamboo and wood based handicraft items and uniquely designed hand woven textile items will get a new market among the Myanmar's customers. Small scale industries such as those making farm implements and tools, stationery, plastic extrusion items, carpentry units, could also develop markets beyond the border.
Besides socio-economic development the project will also lead to reduction in average travel time along the project road by nearly 40%. In addition, the new features of road safety namely vehicular underpasses, crash barriers, road signs & markings, service roads for segregation of slow and high moving traffic, truck lay-by, bus-bays etc. will help in greatly reducing accidents. Improved highway and lesser travel time will lead to savings in terms of fuel cost.
31-Mar-2017: Myanmar becomes the 7th member of SASEC
Myanmar has become the seventh member of the South Asia Sub-regional Economic Cooperation (SASEC) partnership, opening up new markets and supply chain links for trade and business between South Asia and Southeast Asia.
Myanmar’s participation in SASEC is expected to further promote and accelerate inter-subregional cooperation between South Asia and Southeast Asia and beyond, and will contribute significantly to achieving the future development goals of both subregions.
SASEC countries — Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, and Sri Lanka — coordinate the planning of projects and activities to increase economic growth by building transport connectivity, facilitating faster and more efficient trade, and promoting cross-border power trade. To date, SASEC members have invested more than $9 billion in development projects, which have connected markets and businesses over the last 15 years in the subregion. ADB serves as the SASEC Secretariat.
Myanmar is key to realizing greater connectivity and stronger trade and economic relations between the SASEC subregion and the countries of East and Southeast Asia. Myanmar’s membership in SASEC can offer a host of opportunities for realizing synergies from economic cooperation in the subregion.
Road corridors in Myanmar provide the key links between South Asia and Southeast Asia, while ports in the country can provide alternate routes and gateways to the landlocked northeastern region of India. Developing multimodal connectivity between India’s northeastern region, Bangladesh, and Myanmar has the potential to unleash significant economic potential and bring better livelihoods to millions in the region.
Transport linkages between South and Southeast Asia will also become more attractive to businesses once ongoing and planned motor vehicle agreements are finalized and implemented. Negotiations are underway to allow passenger, personal, and cargo vehicles to cross international borders much faster and with fewer border formalities, saving time and money.
Myanmar’s membership comes in advance of the first SASEC meeting of Finance Ministers that will be held in New Delhi on 3 April 2017. SASEC members will announce their vision for SASEC to accelerate and sustain the growth momentum in the region by unlocking their natural resources, industry, and infrastructure through subregional cooperation.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.
31-Mar-2017: South Asia Sub-regional Economic Cooperation (SASEC) Operational Plan (OP) 2016-25 includes nine projects worth $2.4 Billion
Three projects – two Economic Corridors and one Road Bridge – worth an aggregate of $1.2 billion to be in India. India fully supports the SASEC OP as it will improve our economic linkages with East and Southeast Asia in accordance with India’s Act East policy.
The Asian Development Bank (ADB) has approved a total of nine projects costing $2.42 billion as part of the Operational Plan (OP) 2016-2025 of the South Asia Sub-regional Economic Cooperation (SASEC) program. These projects will receive ADB financing of $1.43 billion. These nine projects represent a significant increase compared to the previous 15 years, when the annual average value of projects approved was only about $500 million.
The nine projects comprise of two rail projects in Bangladesh worth $890 million, two economic corridor initiatives (a project and program loan) and a bridge project in India worth an aggregate of $1.2 billion, trade facilitation and airport projects in Bhutan worth $27 million and key SASEC road and energy projects in Nepal worth $302 million. All these projects are aligned with the SASEC OP’s thrusts of developing road and rail links aligned closely with trade routes toward the east, streamlining trade procedures, and improving energy infrastructure.
The Indian corridor projects reflect the SASEC OP’s recent shift in emphasis on developing economic corridors within and between member countries. India fully supports the SASEC OP as an important milestone in the SASEC program, especially as it will pursue the development of infrastructure to improve our economic linkages with East and Southeast Asia, in accordance with India’s Act East policy, thereby raising the competitiveness of the sub-region’s enterprises.
The SASEC OP has identified over 200 potential transport, trade facilitation and energy projects which will require over $120 billion in investments for the next five years, out of which 74 projects have been identified in India with an estimated project cost of over $60 billion. Majority of these projects are located in the Northeast or Eastern part of the country.
The SASEC OP, endorsed in June 2016 by the SASEC member countries, is SASEC’s first comprehensive long-term plan to promote greater economic cooperation among the member countries in the areas of transport, trade facilitation, energy, and economic corridor development. Bringing regional cooperation to a higher level, the SASEC OP plans to extend physical linkages not only within SASEC but also with East and Southeast Asia by the next decade.
Established in 2001, the SASEC program is a project-based partnership to promote regional prosperity by improving cross-border connectivity, boosting trade among member countries and strengthening regional economic cooperation. ADB is the secretariat and lead financier of the SASEC program, which to date has supported a total of 46 projects worth $9.17 billion in transport, trade facilitation, energy and information and communications technology (ICT).
National Trade Facilitation Action Plan (NTFAP)
20-Jul-2017: Government releases National Trade Facilitation Action Plan.
The Union Finance Minister, Shri Arun Jaitley said that the National Trade Facilitation Action Plan (NTFAP) aims to align border procedures with international best practices and improve Ease of Doing Business. He said that it would not only ensure compliance with the Trade Facilitation Agreement (TFA) but would also give impetus to trade facilitation. He also said that this Action Plan gives a time bound map, not only for implementing TFA, but also for India’s initiatives for trade facilitation and Ease of doing Business which goes beyond TFA.
Earlier, under Article 23.2 of the Trade Facilitation Agreement (TFA), a National Committee on Trade Facilitation (NCTF) headed by the Cabinet Secretary was constituted. The NCTF comprises of stakeholders from the Government and the private sectors including trade community. The NCTF has adopted 76 point National Trade Facilitation Action Plan (NTFAP) which is a reflection of the Government’s commitment to implement the Trade Facilitation Agreement (TFA).
The National Action Plan aims to transform cross border clearance ecosystem through efficient, transparent, risk based, coordinated, digital, seamless and technology driven procedures which are supported by state-of-the-art sea ports, airports and land borders.
The objectives to be achieved by National Action Plan are improvement in ease of doing business by reduction in cargo release time and cost, move towards paperless regulatory environment, transparent and predictable legal regime and improved investment climate through better infrastructure.
The Action Plan lists out specific activities which would be carried out by all regulatory agencies like Customs, FSSAI, Drug Controller, Plant Quarantine, DGFT etc. in time bound manner. The Co-ordination among all the stakeholders is the key to achieve the objective of Trade facilitation.
The Action Plan not only covers the activities coming under the TFA but they go beyond the ambit of TFA per se, which have been defined as TFA Plus category. The Action Plan covers many activities in the areas of infrastructure augmentation, particularly the road and rail infrastructures leading to ports and the infrastructure within ports, airports, ICDs, Land Customs stations that cuts across all stakeholders for which various ministries like Shipping, Civil Aviation, Railways, Road transport and Highways, Home Affairs, Finance, Commerce etc. have been assigned specified targets.
All actions covered under the plan have been categorized by prioritizing the activities into short term, midterm and long term. The National Plan would be monitored by the Steering Committee (the operational arm of the NCTF) chaired by the Revenue Secretary and the Commerce Secretary. The plan would be reviewed by the Cabinet Secretary.
Dr Kunio Mikuriya, Secretary General, WCO mentioned about WCO working with G-20 on illicit financial flows. He sought Indian support for the study on illicit financial flows and plugging of trade based money laundering. He also spoke about how WCO is helping many countries in implementation of TFA through their Mercator Programme. He specifically appreciated TFA plus category in India’s Action Plan.