India Updates AS 22 to Block MNC Tax Loopholes

ECONOMY

Overview

India's Ministry of Corporate Affairs has updated Accounting Standard 22 (AS 22), effective April 1, 2026. The changes align Indian rules with the OECD framework to limit multinational corporations' ability to shift profits to low-tax jurisdictions. However, experts say achieving global tax rule uniformity is still a distant goal.

New Rules Target Tax Avoidance

India's Ministry of Corporate Affairs has updated rules for Accounting Standard 22 (AS 22), effective April 1, 2026. Issued on March 10, 2026, this revision brings India's accounting practices closer to global standards set by the Organisation for Economic Co-operation and Development (OECD).

Blocking Profit Shifting

The main goal is to stop multinational corporations (MNCs) from choosing jurisdictions based on tax rates. By making accounting and tax rules more similar, India aims to limit how companies can move profits to low-tax areas, which often reduces the taxes paid domestically. This effort supports a wider international push for fairer global business taxation.

Challenges Remain

S. Murlidharan, a Chartered Accountant, points out that having uniform accounting and tax rules worldwide would greatly reduce MNCs' ability to avoid taxes. However, he notes this ideal is still a long way off. While India's AS 22 update is a positive step, global tax cooperation and consistent enforcement remain significant challenges, meaning a truly level playing field is a distant objective.

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