FM Sitharaman flags transfer pricing burden on developing countries, backs new BRICS tax groups

Finance Minister Nirmala Sitharaman on Wednesday said transfer pricing disputes disproportionately burden developing countries, as India pushed for the creation of two new BRICS working groups focused on international taxation and transfer pricing, and revenue statistics.

Addressing a meeting of BRICS heads of tax authorities, Sitharaman said the two working groups would provide a sustained institutional framework for cooperation on issues facing member countries. The BRICS leaders’ declaration has also welcomed the establishment of the two groups as part of efforts to deepen tax cooperation among member countries.

Technology, administration, and people key to tax cooperation

Sitharaman said three themes had emerged repeatedly from the BRICS tax track during India’s chairship—technology, administration, and people.

She said technology and digital infrastructure could make tax administration more precise and accessible while reducing dependence on individual discretion. She also highlighted the importance of shared governance structures, standards, and practical tools to give BRICS tax cooperation a durable institutional framework.

“Transfer pricing disputes cost developing-country administrations disproportionately. Revenue frameworks that don't fit our fiscal realities distort how we are seen and how we see ourselves. These Working Groups exist because every country in this room has experienced these problems,” Sitharaman said.

The minister said the new working groups were designed to continue beyond India’s current chairship. “They are designed to outlast India's Chairship,” she said. China will take over the rotating BRICS presidency in 2027.

New groups to focus on international tax and revenue data

The International Taxation and Transfer Pricing Working Group will provide a platform for BRICS members to exchange experience on treaty interpretation, transfer pricing audits, advance pricing agreements and mutual agreement procedures, Revenue Secretary Arvind Shrivastava said.

The group will also facilitate discussions on multilateral tax negotiations, including the United Nations Framework Convention on International Tax Cooperation (UNFCITC), where BRICS countries seek a stronger collective voice, Shrivastava said.

The Revenue Statistics Working Group, meanwhile, will develop a framework to measure fiscal performance that reflects the economic and fiscal realities of BRICS countries rather than relying on assumptions developed for different economies, he said.

Sitharaman also said international tax rules were being renegotiated through several multilateral processes, including the UN Framework Convention on International Tax Cooperation. The decisions taken in these negotiations over the coming years would shape cross-border taxation for a generation, she said.

“BRICS economies—as source jurisdictions, as large developing economies, as countries that have built significant domestic tax capacity from a low base—have a perspective on those negotiations that is essential to their fairness and their durability,” Sitharaman said.

Shrivastava said BRICS tax experts had spent two days reviewing the scope of work of the proposed working groups. India’s BRICS chairship, Sitharaman said, was aimed not only at taking decisions during its tenure but also at building institutions that could support future presidencies.