A senior Finance Ministry official said that India is thinking of starting joint audits for multi-nationals (MNCs) operating in India and the ASEAN region to ensure that the balance sheets match those of their annual statements. Citing Chinese policy of joint audits with friendly nations as an example, an Advisor to Finance Minister said that its policy will not be imposing as in Malaysia or Indonesia but more benign like the one in Singapore .

It is not clear what prompted this step to perform joint audits with ASEAN but some say that this could either be a rising number of suspected malpractice cases while others say that this may be an effort to work closer with ASEAN nations to fine-tune tax structures and credits. There is also suspicion that this may be targeted to minimize hawala funding from some unscrupulous front organizations operating out of ASEAN nations. Skeptics say that a cash-strapped and deficit ridden Government is seeking to extract more tax from MNCs including their so-called foreign earnings—this idea has been routinely criticized by most analysts for being half-baked and retrograde.

India is working on creating trade and tax treaties with ASEAN nations in addition to Thailand and Sri Lanka and this may well be a good starting point to harmonize India ’s international taxation system with those of ASEAN nations and avoid double taxation and easier agreement on exempt lists.

Whatever the motive, the focus seems on simplifying tax laws. What is not clear is what the new measures will be.