Countries must deepen cooperation on tax as digital economy expands, says FM Sitharaman

Countries must strengthen cooperation on tax matters as new financial products emerge and the global economy becomes increasingly digital, Finance Minister Nirmala Sitharaman said on Tuesday. The evolving structures of beneficial ownership, she added, also require sustained coordination between jurisdictions to ensure transparency and prevent misuse.

Speaking at the 18th Plenary Meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes, held in New Delhi from December 2 to 5, 2025, Sitharaman stated that challenges arising from digitalisation, confidentiality concerns, and cybersecurity cannot be addressed in isolation.

“These are not challenges that any one country can address alone. They demand coordination, trust, and the timely exchange of relevant information,” she told delegates.

Union Minister for Finance and Corporate Affairs Smt. @nsitharaman today met senior Finance and Economic Ministers from Andorra, Montenegro, Hungary, Kuwait, Cayman Islands, Slovak Republic, Panama and Zimbabwe,

in presence of Union Minister for State for Finance Shri… pic.twitter.com/NQyRda3eA2

— Ministry of Finance (@FinMinIndia) December 2, 2025

The plenary, attended by global tax policymakers and senior administrators, was inaugurated in the presence of Minister of State for Finance Pankaj Chaudhary, Revenue Secretary Arvind Shrivastava, CBDT Chairman Ravi Agrawal, and Global Forum Chair Gaël Perraud. Hosting the event, officials said, reflects India’s commitment to financial integrity, fair taxation, and the strengthening of international tax governance.

Sitharaman stressed that the backbone of global tax cooperation lies in trusted relationships between jurisdictions.

“In a global economy, stable and trusted relationships are indispensable. Where trust exists, cooperation becomes easier, investments grow, and economic relationships become more stable,” she said.

She highlighted India’s own experience, noting a visible strengthening of voluntary compliance over the past decade. This shift, she said, has been driven not only by enforcement but also by clarity, simplification, and a conscious effort to build trust with taxpayers.

“Citizens are more willing to participate when they are certain that the system rewards honesty and acts firmly against evasion,” she said.

For India, transparency in tax matters is anchored in a deeper principle — that economic governance must be rooted in fairness and responsibility.

Sitharaman said India’s laws against illicit financial flows and undisclosed foreign assets reflect this philosophy, as does its participation in both the Exchange of Information on Request and the Automatic Exchange of Information standards under the Global Forum.

She also emphasised the developmental impact of tax transparency, particularly for emerging economies. She noted that public infrastructure, healthcare, education, and welfare programmes depend significantly on domestic resources.

“When national wealth escapes legitimate taxation, it creates not only a revenue gap but also a development gap,” she said. “Every rupee or dollar mobilised through transparency can help improve lives.”

Sitharaman pointed to India’s increasing use of technology and artificial intelligence to process exchanged information more effectively and to strengthen risk assessment.

At the same time, she said, innovation must be underpinned by robust procedures. “Innovation must always walk hand in hand with accountability. It is that balance which gives systems strength and credibility,” she said.

Looking ahead, the finance minister said the Global Forum’s role will be crucial in reviewing implementation, refining standards, and helping countries build capacity. She urged member jurisdictions to ensure that the information they exchange leads to measurable outcomes in tackling evasion and improving compliance.

The four-day plenary in New Delhi is expected to advance discussions on the next phase of international tax transparency, including improved beneficial ownership frameworks, greater resilience against cyber risks, and more efficient cross-border information exchange.

With the digital economy transforming how value is created and transferred, the need for cooperative, predictable, and trustworthy tax systems, Sitharaman said, has never been greater.