In a recent study conducted by Deloitte, the international consulting firm found that in terms of predictability of tax laws, India’s performance is very disappointing in the Asia-Pacific region. Among 800 tax executives in 20 countries 75 percent people were of the opinion that both China and India have poor tax governance. India frequently change its tax positions in comparison to other countries in the region. Every jurisdiction has some tax challenges, but India is more intensely affected by these negative reviews.
Among majority of respondents, the perception was clear that the complexity and predictability of tax laws in these two big powers – China and India play a significant role in determining their investment decisions. Many tax executives in China and India thought that the consistency is the most important issue in making business decisions.
Most people have the same opinion that both India and China tax regimes had become more complex. They pointed out that, these tax jurisdictions have become more complicated than four years back in 2010 at the time of previous surveys. A cumulative 31 percent of these executives feel that, the consistency of tax regimes across the region had changed in a significant way and it is not a positive change at all, it is going to be more and more become less consistent day by day. Despite poor tax jurisdiction, the study revealed that India in terms of consistency of tax regime had better results than the counterpart China and Indonesia in the last four years.
India is also ahead of China in tax auditing and punishment. People shared their thoughts that tax administrative procedures in countries like Singapore, Japan and Hong Kong is far better than India. The most disturbing outcome of the report highlighted that the effectiveness of the administrative procedures of India to resolve the tax issues is very low and disappointing.
The irony of our system is that who are behind the formation of tax laws are not well versed with the tax system, market and the implication of the proposed or amended law. A weak bureaucratic machinery is also responsible behind delayed procedures, audits and control measures. The majority of people want to evade the tax, despite the possession of valuable assets. People are not in the habit of disclosing their actual annual earnings and whatever part they are liable to pay they had made circumvent ways to deceive the system. All in all a successive tax regime is only possible in an environment of mutual cooperation and transparent policies.