BRICS declares intention to cooperate in fighting international tax avoidance

It has been agreed to produce a paper on base erosion and profit shifting and to establish a governance framework by May 2013

The heads of the tax authorities of the BRICS countries (Brazil, Russia, India, China and South Africa) issued a joint communique on 18 January 2013 announcing that the five countries are committed to jointly developing international tax and transfer pricing standards and to sharing tax information with a view to fighting tax evasion and avoidance.

The communique expresses the commitment of the BRICS countries to cooperate on issues of tax policy and tax administration, for example, by sharing anti-evasion and noncompliance practices, developing a BRICS-specific mechanism to counter abusive tax avoidance transactions and promoting the effective exchange of information.

To put the issuing of the communique in context, it should be noted that all the BRICS countries (except China) have signed the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which seeks to help governments enforce their tax laws by creating an international framework for cooperation among countries in countering international tax avoidance and evasion.

While the joint communique in essence largely represents a declaration of intent, it may lead to the conclusion of new multilateral agreements.