Uncertainty over global tax deal, doesn't work without US, says finance secretary Tuhin Kanta Pandey

Finance Secretary Tuhin Kanta Pandey

Union finance secretary Tuhin Kanta Pandey on February 4 said there is a cloud of uncertainty hovering over the global tax deal and it's unlikely to remain functional after President Donald Trump decided to pull out of the agreement.

"US exit has added a lot of uncertainty to global tax deal. It doesn't work without the US," Pandey said during a pot-Budget event organised by Assocham.

After years of stalled negotiations on global tax issues hosted by the Paris based-Organisation for Economic Cooperation and Development (OECD), a global deal to ensure big companies pay a minimum tax rate of 15 percent was sealed in 2021.

The two-part tax deal aims to end competitive reductions in corporate tax rates around the world and made it harder for highly profitable multinational companies to avoid taxation.

The finance secretary also pointed out that both the government and the Reserve Bank are monitoring the Rupee, which is in a free flow system. He also added that a falling rupee will make exports more competitive.

"Rupee is in a free flow system. Both the government and RBI are monitoring the situation. The falling rupee will also add to export competitiveness. RBI will need to take a call on the level of rupee," he said.

Depreciation will pose a risk to inflation, but falling rupee will also add to export competitiveness, Pandey added.