Consider the following statements 1 India is a party to Multilateral Convention on Mutual Administra...........

Economic Affairs World Trade Organsiation (WTO)

Consider the following statements.

1. India is a party to Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

2. A Bilateral Investment Agreement (BIT), to which India is a party, must be approved by the WTO to be considered valid and effective.

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

Statement 1: It was developed jointly by the OECD and the Council of Europe in 1988.
• The Convention represents a wide range of countries, including all G20, BRIICS and OECD countries, financial centres and several developing countries.
• India is among the 98 countries and jurisdictions that have already joined the Convention.
• The convention regulates information exchange between states parties on the exchange of information regarding tax matters.
• Panama has agreed to sign a multilateral tax treaty, which the Indian agencies believe will help them expedite investigations into the “Panama papers”.
Statement 2: A bilateral investment treaty (BIT) is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state (FDI).
• It does not need to be approved by WTO, but investors can seek recourse to WTO (under dispute resolution mechanism) claiming violation of core WTO principles such as national treatment.
• BIT increases the comfort level and boosts the confidence of investors.