TOPIC: GS 2 Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests.
Encouraging accord
What is the news?
- The Finance Ministers of the G7 nations appear to have heeded the advice to ‘never let a good crisis go to waste’ when they agreed last week to set a global minimum tax of at least 15%.
COVID-19 effect on Global Economy
- With the COVID19 pandemic having caused the world economy to shrink by an estimated 3.5% in 2020 and forced most countries to dip into their coffers to mitigate the fallout
- The seven richest nations opted to use the opportune moment to plug a key loophole in the international tax regime.
G-7 Intiatives
- The G7 Ministers stressed that as part of efforts to secure a ‘Safe and Prosperous Future for All’ they would strongly back the broader efforts
- It is under way through the G20/OECD to address tax challenges arising from globalization and digitalization of the economy.
- The rapid and relentless march of technological advancement, especially in the domain of global communications and connectivity, has resulted in a world economy
- The digital sphere estimated in 2016 at $11.5 trillion or over onesixth of global GDP is exponentially outpacing overall economic growth.
- The increasing digitalization has challenges to taxing multinational corporations which have sought to minimise their total tax outgo by recognizing a bulk of their revenue in lowtax jurisdictions.
- The OECD which is the G20 spearheading the ‘Inclusive Framework on Base Erosion and Profit Shifting’ initiative aimed at ending tax avoidance
- Estimates that countries are collectively deprived of as much as $240 billion in tax revenue annually due to avoidance by MNCs.
- As the OECD’s SecretaryGeneral noted the G7 deal, such distortions “can only be effectively addressed through a multilaterally agreed solution”.
- The G7 also agreed on “an equitable allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises”.
India’s point in Term
- For India, estimated to be losing more than $10 billion in revenue each year to “global tax abuse” by MNCs according to the Tax Justice Network
- More than 90 countries that have joined the BEPS framework, a wider agreement at next month’s meeting of G20 Finance Ministers and central bank Governors could have far reaching implications.
- India could benefit from the levy of taxes on MNCs including technology and Internet economy giants, which have taken advantage of the loopholes in the global tax system.
Way Forward
While there are still wrinkles to be ironed out, including the issue of local levies on digital transactions, the political will to ensure greater fairness and equity in revenue sharing is a positive .
Mains Question
The political will show by G7 to ensure fairness in revenue sharing is a good augury. Explain
PRELIMS PUNCHERS
- Pakke Tiger Reserve
It also known as Pakhui Tiger Reserve, is a Project Tiger reserve in the Pakke Kessang district of Arunachal Pradesh in northeastern India. This Tiger Reserve has won India Biodiversity Award 2016 in the category of ‘Conservation of threatened species’ for its Hornbill Nest Adoption Programme.
The terrain is rugged with mountainous ranges in the north and narrow plains and sloping hill valleys in the south. The sanctuary slopes southwards towards the river valley of the Brahmaputra River. The area of Brahmaputra and Chittagong Hills, which includes Pakke and Namdapha Tiger Reserve, is the north-western limit of the Indochinese tiger’s range, bordering the eastern limit of the Bengal tiger’s range . The habitat types are lowland semi-evergreen, evergreen forest and Eastern Himalayan broadleaf forests.
- Interoperable Criminal Justice System
The Interoperable Criminal Justice System has been introduced to facilitate speedy justice through data-exchange between the courts, jails and the forensic labs. It has been developed by NIF for the District Courts, prisons and police stations, namely Case Information System, e-Prisons and Kanoon Vyavastha, respectively.
Under this, all stakeholders would have online and instant access to data available in different software applications, thereby reducing the time normally consumed in manual exchange of documents or information amongst related departments. Some of its other objectives include the removal of exchanging paper-based information amongst the stakeholders and utilization of digitized data of other domains directly in individual applications
- Sea Snot
‘Sea snot’ is marine mucilage that is formed when algae are overloaded with nutrients as a result of water pollution combined with the effects of climate change. The nutrient overload occurs when algae feast on warm weather caused by global warming. Water pollution adds to the problem.
Overproduction of phytoplankton caused by climate change and the uncontrolled dumping of household and industrial waste into the seas has led to the present crisis. The thick slimy layer of organic matter, which looks like a viscous, brown and foamy substance, has spread through the sea south of Istanbul and also blanketed harbours and shorelines.
- Nilgiri Biosphere Reserve
The Nilgiri Biosphere Reserve is an International Biosphere Reserve in the Western Ghats and Nilgiri Hills ranges of South India. The Nilgiri Sub-Cluster is a part of the Western Ghats, which was declared a World Heritage Site by UNESCO in 2012. It is the largest protected forest area in India, spreading across Tamil Nadu, Karnataka and Kerala. It includes the Aralam, Mudumalai, Mukurthi, Nagarhole, Bandipur and Silent Valley national parks, as well as the Wayanad, Karimpuzha, and Sathyamangalam wildlife sanctuaries.
A fascinating ecosystem of the hill ranges of Nilgiris Biosphere Reserve by UNESCO in September 1986 under Man and Biosphere Programme. Nilgiris Biosphere Reserve is India’s first and foremost biosphere reserves with a heritage, rich in flora and fauna. Tribal groups like the Badagas, Todas, Kotas, Irullas, Kurumbas, Paniyas, Adiyans, Edanadan Chettis, Allar, Malayan etc., are native to the reserve. India’s natural Gold fields are also located in the regions in and around Nilgiris Biosphere Reserve scattered in the states of Karnataka, Kerala and Tamil Nadu.
PRELIMS QUESTIONS
- Consider the following statement with reference to Pakhui Tiger Reserve
- It is located in Assam
- The sanctuary slopes towards the river valley of the Brahmaputra River
Select the correct statement using code given below.
(a). 1only (b) 2 only
(c). Both of them (d). None of the above
Answer : B
It also known as Pakhui Tiger Reserve, is a Project Tiger reserve in the Pakke Kessang district of Arunachal Pradesh in northeastern India. This Tiger Reserve has won India Biodiversity Award 2016 in the category of ‘Conservation of threatened species’ for its Hornbill Nest Adoption Programme.
The terrain is rugged with mountainous ranges in the north and narrow plains and sloping hill valleys in the south. The sanctuary slopes southwards towards the river valley of the Brahmaputra River. The area of Brahmaputra and Chittagong Hills, which includes Pakke and Namdapha Tiger Reserve, is the north-western limit of the Indochinese tiger’s range, bordering the eastern limit of the Bengal tiger’s range . The habitat types are lowland semi-evergreen, evergreen forest and Eastern Himalayan broadleaf forests.
- Global minimum tax is the intiative of
- G-20
- G- 7
- G- 4
- OCED
Answer: B
The Finance Ministers of the G7 nations appear to have heeded the advice to ‘never let a good crisis go to waste’ when they agreed last week to set a global minimum tax of at least 15%.
- The G7 Ministers stressed that as part of efforts to secure a ‘Safe and Prosperous Future for All’ they would strongly back the broader efforts .The rapid and relentless march of technological advancement, especially in the domain of global communications and connectivity, has resulted in a world economy The digital sphere estimated in 2016 at $11.5 trillion or over onesixth of global GDP is exponentially outpacing overall economic growth. The increasing digitalization has challenges to taxing multinational corporations which have sought to minimise their total tax outgo by recognizing a bulk of their revenue in lowtax jurisdictions.