Mr. Akhilesh Ranjan, Joint Secretary Ministry of Finance, and also Competent Authority for the Government of India, spoke this past week at the Pacific Rim Tax Institute, February 19-20, reaffirming India’s commitment to a new non-adversarial tax regime to encourage foreign investment and fair treatment of taxpayers. Mr. Ranjan’s appointment, coupled with several key administrative enactments, signals a new positive and cooperative attitude both to taxpayers and the larger international tax community.
Appointed in July 2013, Mr. Ranjan replaces Mr. S.K. Mishra, the former Competent Authority, whose insistence on the primacy of source country rights and novel (and aggressive) interpretation of permanent establishment rules both ostracized India from the tax community and alienated foreign investors. It is perhaps not coincidence that during Mr. Mishra’s tenure, the number of Indian transfer pricing controversies skyrocketed, gross domestic product growth slowed and U.S.-India treaty relations literally ground to a halt.
While Mr. Ranjan did not denounce the policies of his predecessor, he noted that the approach had been “counterproductive.” Since Mr. Ranjan’s time at the help, he has gone on to revamp the Dispute Resolution Panels, open up the Advance Pricing Agreement program, including the allowance of rollback, and just this past month reached a “framework” agreement with the United States to mechanically resolve a backlog of some 250 Competent Authority cases and resume U.S.-India bilateral communications.
In the midst of the tumult and uncertainty that is the state of the base erosion and profit shifting process, the positive change in developments coming from India offers a sign of hope to participants on the policy-making stage of future meaningful consensus. And even more so, to countless current and future businesses, that if principle cannot win the day, then at least pragmatism might be given a chance.