The Telegraph
Friday , July 22 , 2011
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Swiss treaty on black money by September

New Delhi, July 21: Switzerland will share information on money stashed away by Indians in its banks from April this year after its parliament ratifies an amended double taxation avoidance treaty.

Finance minister Pranab Mukherjee said, “My information is that the legislation may be ratified by September this year.”

The treaty, which has to be ratified by both the houses of the Swiss legislature and accepted by all its cantons, does not provide for sharing information with retrospective effect. However, because of the timing of the treaty, it will provide information from this financial year onwards.

“We can trace back investigations from information leads that we get and gain information into hoards stashed away in the past,” Mukherjee said.

A report of the Swiss Banking Association allegedly claimed that Indians were among the biggest depositors of black money in banks located in Switzerland. More recently, Julian Assange, WikiLeaks head, had said Indians figured prominently among those with secret accounts in Swiss banks.

The finance minister has launched a massive exercise to redraw tax avoidance treaties with some 87 countries to get information on black money.

“Most countries were reluctant to share information …it is only after the G20 meetings in the UK and the US, where we decided to pressurise them, that they have started co-operating,” the minister said.

“We have to have co-operation of these countries to nail these people (who have stashed away black money).”

Mukherjee had actively worked with other leading G20 states in finalising a programme of peer review, and other strong counter-measures to deal with tax havens, which refused to end bank secrecy laws. As a consequence, India was elected vice-chair of a peer review group of the Global Forum on Transparency and Exchange of Information.

India has completed negotiations to amend tax treaties with some 57 countries, including some states which were not independent countries and hence more difficult to pressurise with global compacts such as St Kitts, Virgin Islands and the Isle of Man.

“The G20 had decided countries could use a separate tool box to deal with such entities,” Mukherjee said. “Negotiations are on with another 29 states,” he said.

India’s black money abroad is believed to be more than its total foreign exchange reserves, according to some calculations. A study by the Global Financial Integrity estimated black money stashed abroad at $462 billion.

A note prepared by the finance ministry revealed that in the last 24 months, the Indian income tax department had “collected some 7,704 pieces of information from treaty countries on payments received by Indian citizens in various countries and on bank accounts”.

“We have made more than 175 requests to our treaty partners in cases of specific taxpayers in the last financial year,” Mukherjee said.

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