Do not offer low tax rates, Sinha tells international community

By Our Special Correspondent

NEW DELHI, NOV. 27. After successfully ending the sales tax rate war among States, the Union Finance Minister, Mr. Yashwant Sinha, today enlarged his call to the international community to curb the ``unhealthy practice of lowering taxes to attract business and investments.''

Participating in a technical conference of the Commonwealth Association of Tax Administration here today, Mr. Sinha said ``competition among countries to attract investments by offering very low tax rates has been noticed. Such tax competition is harmful as it leads to capital flight and the overall narrowing of the tax base in the world. The menace of tax havens has been recognised by the Organisation for Economic Cooperation and Development who have recently made a detailed study in this regard''.

In this context, Mr. Sinha said the Government reserves the right to ask investors about the source of their money. The investment should come from legitimate sources and should not be transportation of tainted income.

Referring to the topic of the conference - reforms and modernisation of tax administration in the new millennium - he said modern tools of technology should be used to ensure that tax evasion was curbed at national and international levels and called upon the Commonwealth to come forward to set an example.

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Section  : National
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