Swiss DTAA to allow India access to banking info: Pranab
The Double Taxation Avoidance Agreement signed with Switzerland will allow India access to banking details of its citizens in that country including for enforcement purposes, but it will be operational with prospective effect, Govt told the Lok Sabha.
"This (DTAA) will provide us an opportunity to have the relevant bank information for taxation purposes," Finance Minister Pranab Mukherjee said in a statement.
However, he said the new provision will be applicable only for prospective information and not for past information.
Mukherjee and Swiss Foreign Minister Micheline Calmy-Rey had signed the revised Double Taxation Avoidance Agreement (DTAA) in New Delhi on Monday.
He said the Swiss Bank transactions were so strictly enforced that only once in 1945 the assets of the Nazi leaders who were subjected to Nuremberg trials were revealed by them.
"Before and after that they have not revealed any such information. This (DTAA) will provide us an opportunity to have the relevant bank information for taxation purposes," Mukherjee said.
He said India has taxation agreements with many other countries using which the government can raise a demand for taxes.
"But we cannot disclose this information to any authority including Parliament," he said.
With the signing of the amended protocol with Switzerland, the government would be able to share the information, which it would get, with Parliament, he said.
Mukherjee said the Swiss authorities have been refusing to share any banking information with departments other than Income Tax.
" The provision was that it will be given only to the Income Tax Department and the Income Tax Department can use it only for its own purposes of making assessment of income tax and wealth tax, but they cannot transfer it to other authorities".
"For instance, even they cannot give it to the Enforcement Directorate, if there is a case of money laundering. That provision will also be made available," Mukherjee said.
India, Switzerland sign revised taxation treaty
India and Switzerland on Monday signed the revised Double Taxation Avoidance Agreement, a move that will help the government seek details about illicit wealth allegedly stashed away by Indians in Swiss banks.
Finance Minister Pranab Mukherjee and Swiss Foreign Minister Micheline Calmy-Rey signed the revised pact in New Delhi.
"The revised Double Taxation Agreement contains provisions on the exchange of information in accordance with the OECD standard, which were negotiated in line with the parameters decided by the (Swiss) Federal Council," the Swiss Federal Department of Finance (FDF) said in a statement.
The issue of Indians having secret Swiss bank accounts is a political hot potato and was a poll plank during last year's general elections.
Indians are alleged to have assets worth billions of dollars in banks in Switzerland.
Swiss banks' had said that exchange of information would be based on OECD (Organisation for Economic Cooperation and Development) norms.
Paris-based OECD sets the international tax standards.
Switzerland is entering into revised tax pacts with many countries in accordance with OECD's Model Tax Convention, to facilitate the bilateral exchange of information related to bank account details of tax evaders.
Earlier in the day, when asked about the terms and reference in the revised tax treaty with Switzerland, Banashri Bose Harrison, who is the Joint Secretary (Central Europe) at the Ministry of External Affairs, said they were at par with other countries.
"(The revised treaty is) exactly at par... (with) what has been signed (by Switzerland) with other countries," Banashri Bose Harrison said.
According to FDF's statement, compared with the current taxation pact between India and Switzerland, "it is now possible to come to an agreement with India on an automatic and extensive most favoured nation clause".
In the case of dividends, interest, royalties and payments for technical services, the clause makes provision for the lowest withholding tax rate - which India has with another OECD nation - automatically applying to Switzerland, the statement noted.
Moreover, the revised treaty would ensure that in the future, shipping companies operating internationally would have to pay tax on their profits only in their country of domicile.
Currently, India has DTAA's with as many as 79 countries but all of them do not have provision for exchange of information related to taxation.