Tax Inspectors Without Borders (TIWB) Programme in Seychelles

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    • Recently, Tax Inspectors Without Borders (TIWB) launched its programme in Seychelles. 
      • India was chosen as the Partner Administration and has provided a Tax Expert for this programme.

    About the Programme

    • This programme is expected to be of 12 months duration.
    • In this duration, India will collaborate with the TIWB Secretariat and the UNDP Country Office in Mauritius and Seychelles.
      • The aim is to aid Seychelles in strengthening its tax administration by 
        • transferring technical know-how and skills to its tax auditors through sharing of best audit practices. 
    • The focus of the programme will be on Transfer Pricing cases of tourism and financial services sectors.

    Transfer Pricing

    • In taxation and accounting, transfer pricing refers to 
      • the rules and methods for pricing transactions within and between enterprises under common ownership or control.
      • E.g.: Say an e-commerce giant ‘X India Ltd’ will try to buy keyboards from ‘X USA Ltd’ at higher prices than the market rate in order to shift its profit margin to the USA.
      • Thus, the tax burden for ‘X India Ltd’ will reduce and the profitability of the parent company ‘X USA Ltd will increase’.
    • They are active tools used by many MNCs to avoid or evade tax by shrinking the profit margins.
      • The mechanism described above is related to base erosion and profit shifting (BEPS).
    • Few mechanisms to curb it are 
      • Advance Transfer Pricing Agreements
      • Minimum percentage of revenue as tax and 
      • Close scrutiny by setting market prices as a benchmark.

     

    • This programme is the 6th TIWB programme which has been supported by India by providing Tax Expert.
      • In the past, India has also extended its support to Bhutan under the same program.
      • It depicts Indian commitment to South-South Cooperation, SAGAR initiative and elder brother approach to the Indian Ocean Nations.

    Tax Inspectors Without Borders (TIWB)

    • It is a joint initiative of 
      • the United Nations Development Programme (UNDP) and 
      • the Organisation for Economic Cooperation and Development (OECD).
    • It was launched in July 2015.
    • Aim: To strengthen developing countries’ auditing capacity and multinationals’ compliance worldwide.
      • It is a capacity-building programme.
    • Modus Operandi
      • It deploys qualified experts in developing countries across Africa, Asia, Eastern Europe, Latin America and the Caribbean.
      • They train the local countries’ personnel in fields of 
        • tax capacity and audits, 
        • criminal tax investigations and 
        • the effective use of automatically exchanged information.
    • TIWB assistance has led to increased domestic resource mobilisation in some of the least developed countries in the world.

     

    India Seychelles Relations

    Courtesy: Britannica

    The beginning of the Relations and Current Status

    • Military tie up/ Security cooperations: 
      • India established diplomatic relations with Seychelles in 1976 after its independence.
      • Since then Indian Armed Forces have regularly sent its contingent to take part in the Seychelles National Day celebrations.
      • India gifted and installed six coastal surveillance radar systems in Seychelles in 2015 enabling better coastal security for Seychelles.
      • The Seychelles government has leased Assumption Island to the Indian Navy to build an overseas base of operations there.
    • Engagement on Economic and Environment Front: 
      • India enjoys a trade surplus with Seychelles.
      • The Tax Information Exchange Agreement (TIEA) between India and Seychelles was signed in August 2015.
      • The Blue Economy Protocol between India and Seychelles was signed in August 2015.
    • Multilateral Forums
      • India is an observer nation of the Indian Ocean Commission, of which Seychelles is a member.
      • Both nations are the founding members of the International Solar Alliance (ISA).
      • The SAGAR initiative of India is supported by Seychelles.
    • Cultural Relations
      • Cultural Exchange Programme (CEP) was signed with Seychelles to mark the friendship and goodwill between the two countries in 2018.
      • There is a huge Indian diaspora (around 11% of Seychelles Population) which plays a dominant role in promoting goodwill on both sides.

    Challenges and Way Ahead

    • Increasing Chinese Influence
      • China is trying to change the geopolitics in the Indian Ocean by String of Pearls.
      • Hence, the geostrategic importance of Seychelles’s location has become even more.
    • More Areas of Cooperation and need for Strengthened Efforts
      • A strengthen shared efforts of both the countries is required in areas like 
        • Drug trafficking, 
        • IUU (Illegal, unreported and unregulated) fishing, piracy and 
        • Climate change while protecting the ocean ecosystem.

    Source: PIB