Context: Recently, Tax Inspectors Without Borders (TIWB) launched its programme in Seychelles. 

• India was chosen as the Partner Administration and has provided a Tax Expert for this programme.

About the Programme

• This programme is expected to be of 12 months duration.
• In this duration, India will collaborate with the TIWB Secretariat and the UNDP Country Office in Mauritius and Seychelles.
• It depicts Indian commitment to South-South Cooperation, SAGAR initiative and elder brother approach to the Indian Ocean Nations.

The aim is to aid Seychelles in strengthening its tax administration by 

• transferring technical know-how and skills to its tax auditors through sharing of best audit practices. 

The focus of the programme will be on Transfer Pricing cases of tourism and financial services sectors.

• This programme is the 6th TIWB programme which has been supported by India by providing Tax Expert.

In the past, India has also extended its support to Bhutan under the same program.

About Tax Inspectors Without Borders Programme (TIWB)

• It is a capacity-building programme.
• It is a joint OECD/UNDP initiative launched in July 2015 to strengthen developing countries' auditing capacity and multinationals' compliance worldwide.
• It deploys qualified experts in developing countries across Africa, Asia, Eastern Europe, Latin America and the Caribbean to help build tax capacity in the areas of audit, criminal tax investigations and the effective use of automatically exchanged information.
• TIWB assistance has led to increased domestic resource mobilisation in some of the least developed countries in the world.

Additional Information

Transfer Pricing

In taxation and accounting, transfer pricing refers to 

• the rules and methods for pricing transactions within and between enterprises under common ownership or control.

E.g.: Say an e-commerce giant ‘X India Ltd’ will try to buy keyboards from ‘X USA Ltd’ at higher prices than the market rate in order to shift its profit margin to the USA.

• Thus, the tax burden for ‘X India Ltd’ will reduce and the profitability of the parent company ‘X USA Ltd will increase’.

They are active tools used by many MNCs to avoid or evade tax by shrinking the profit margins.

• The mechanism described above is related to base erosion and profit shifting (BEPS).

Few mechanisms to curb it are 

• Advance Transfer Pricing Agreements
• Minimum percentage of revenue as tax and 
• Close scrutiny by setting market prices as a benchmark.