- A Tax Information Exchange Agreement (TIEA) is a mutual agreement between countries that facilitates the exchange of information relevant to the administration and enforcement of their respective domestic tax laws.
- The exchanged information typically pertains to the determination, assessment, and collection of taxes, recovery and enforcement of tax claims, as well as investigations and prosecutions.
- Objectives of TIEA:
- The primary purpose of TIEAs is to promote international cooperation in tax matters.
- They enable countries to share crucial tax-related information, fostering transparency and combating tax evasion and avoidance.
- India’s Involvement in TIEAs:
- As of 2019, India had entered into 21 TIEA arrangements with various countries.
- These agreements strengthen India’s ability to access information needed for effective tax administration and enforcement.
FAQs
1. What is a Tax Information Exchange Agreement (TIEA)?
A: A Tax Information Exchange Agreement (TIEA) is a bilateral agreement between two countries that facilitates the exchange of information relevant to enforcing tax laws. TIEAs provide a legal framework for the exchange of information upon request, ensuring transparency and combating tax evasion.
2. How does a TIEA differ from a Double Taxation Avoidance Agreement (DTAA)?
A: While both TIEAs and DTAA aim to prevent tax evasion and promote transparency, they differ in scope and purpose. DTAA focuses on avoiding double taxation for individuals and entities operating in both signatory countries, whereas TIEAs specifically address the exchange of information to enforce tax laws.
3. What types of information are typically exchanged under a TIEA?
A: Under a TIEA, countries can exchange various types of information, including bank account details, ownership information of companies, trusts, and foundations, as well as any other data relevant to tax enforcement. This information exchange helps authorities identify and address tax evasion and non-compliance.
4. How do countries typically request information under a TIEA?
A: Countries requesting information under a TIEA usually submit formal requests to the relevant tax authorities of the partner country. These requests outline the specific information needed and the reasons for the request, ensuring that the exchange of information is conducted within the legal framework established by the agreement.
5. What are the benefits of TIEAs for participating countries?
A: TIEAs offer several benefits, including enhanced cooperation between tax authorities, improved transparency in financial transactions, and a more effective means of combating tax evasion and avoidance. By facilitating the exchange of information, TIEAs contribute to the integrity of the global tax system and help ensure that all taxpayers meet their obligations.
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