Millennium Post

Black money menace: Swiss exchanging ‘lawful’ info with India

With India stepping up its pursuit of alleged black money in Swiss banks, Switzerland says it is exchanging information with Indian authorities on all lawful requests, but cannot help on enquiries based on stolen banking data.

The European country, which has often been accused of being the most favoured place for stashing illicit wealth by Indians, also said it is ‘committed to resolving any open questions with India regardless of the upcoming elections’.

The issue of Indians using the famed secrecy walls of Swiss bank accounts to hide black money has been a matter of great debate in India, while it is becoming one of the major talking points in the run up to Lok Sabha polls scheduled to start next month.

India has stepped up pressure on Switzerland in recent months to get information about alleged untaxed money held by some Indians in Swiss banks.
However, Indian authorities are believed to have got initial information about such Swiss accounts through third-party countries, who had shared relevant details with India after getting holding of allegedly stolen banking data.

Emphasising that requests based on stolen bank accounts information cannot be entertained, Switzerland's Finance Ministry confirmed that the two countries have been in constant contact in recent months to discuss tax issues. Rejecting charges that the European country was not cooperating with India, a Swiss Federal Department of Finance spokesperson said from Bern that ‘the relationship between India and Switzerland continues to be one of mutual trust’.

‘Switzerland understands India's wish to fight tax evasion. Switzerland trusts that India shares its conviction that any solution can only be found within applicable law and that both parties must respect their national and international legal obligations.
‘Switzerland, for example, cannot grant administrative assistance for requests which are based on information initially obtained through a criminal offence under Swiss law (for example, stolen bank information).

‘Switzerland is responding and exchanging information with respect to requests submitted by India in accordance with the Swiss-Indian agreement for the avoidance of double taxation.

‘Thus, Switzerland is responding and exchanging information with respect to a number of other requests submitted by India in accordance with the Swiss-Indian agreement for the avoidance of double taxation,’ the official added. The comments assume significance since on 17 February Finance Minister P Chidambaram while talking about black money menace had specifically mentioned Switzerland as one of the jurisdictions that is not extending co-operation.
While the government has often talked about steps being taken to address the black money menace, opposition parties like the BJP and the Aam Aadmi Party (AAP) have already termed it as a major issue for the upcoming polls. According to the Swiss government official, an expert delegation from Switzerland visited India and held discussions in early February to discuss tax issues.
‘Initiated by Switzerland, a two-day encounter between the expert delegations of the two countries took place in New Delhi on 4 and 5 of February 2014,’ the official said.

‘The meetings took place in a friendly and constructive atmosphere and allowed both sides to explain their respective views in a transparent way in order to get a better knowledge about each other's positions,’ he added.

Despite efforts by the Alpine nation to shed its banking secrecy tag, Switzerland is still perceived in some quarters as a safe haven reluctant to share information.
Latest data available with the Swiss National Bank shows that total funds held by Indians in Swiss banks declined to a record low of about Rs 9,000 crore (1.42 billion Swiss francs) at the end of 2012, as compared to around Rs 14,000 crore (2.18 billion Swiss francs) a year ago.
The overall funds held in Swiss banks by entities from across the world also fell from $1.65 trillion to $1.5 trillion during 2012.
In its crackdown against black money, India has initiated action in at least 84 cases and many more are being investigated, Finance Minister P Chidambaram said last month. The government is deploying ‘special efforts and alternative measures’ to get information on cases of alleged tax evasion through zero or low-tax jurisdictions abroad, he added. ‘Prosecutions for willful tax evasion have been launched in 17 other cases. More enquiries have been initiated into accounts reportedly held by Indian entities in no tax or low tax jurisdictions,’ he had said. Regarding the 67 cases, Chidambaram had said tax liability would be determined and wherever law requires penalty would be imposed.
‘All that we are trying to say is this exercise was started in 2011. It gathered pace in 2013. We faced numerous obstacles. Even now we have virtually no co-operation from a country like Switzerland. We are trying to get information through special efforts and alternative measures,’ he added.

Seen as a major step forward, Switzerland in October 2013 agreed to automatic exchange of tax information and mutual administrative assistance in tax matters with overseas jurisdictions.

Switzerland is now a signatory to OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters, to which India is also a signatory.

The convention, once operational, would require Switzerland to extend all kinds of mutual assistance in tax matters including exchange on request, spontaneous information sharing, tax examinations abroad, and assistance in tax collection.
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