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Swiss banks will share account info of tax evaders

Discussion in 'World Affairs' started by Bhushan, Aug 31, 2010.

  1. Bhushan

    Bhushan SENIOR MEMBER

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    Swiss banks will share account info of tax evaders

    NEW DELHI: In a major step towards the government getting hold of details of Indian money stashed in Swiss bank accounts, a revised agreement with Switzerland will allow investigators to access information relating to not just tax fraud but evasion as well.

    The reworked double taxation agreement ( DTA), signed by India and Switzerland on Monday, will mean Indian authorities can seek information about account-holders in Swiss banks from January 2011 as long as they have a case, but the agreement won't facilitate a fishing expedition, Swiss foreign minister Micheline Calmy-Rey said.

    In an exclusive interaction with TOI, Calmy-Rey said starting January 1, 2011, Swiss authorities will provide information to India on cases of tax fraud and tax evasion. Ever since reports emerged of Indians having accounts in tax havens like Liechtenstein and the success of governments like the US in accessing these accounts, New Delhi has been working to get better terms from the Swiss.

    A new deal between India and Switzerland may be major step forward in the fight against tax fraud.

    "Under the revised pact, we will give information to India not just in cases of tax fraud but also in tax evasion cases. We are also making a major concession for India in that we will start this process retroactively from January 1, 2011, as soon as ratification of the revised agreement has taken place in the course of 2011," Swiss foreign minister Micheline Calmy-Rey said.

    She also pegged the total amount of money in Swiss banks at 2,100 billion francs, or $2,050 billion, half of which were institutional funds.

    "We don't have individual or a country-wise break-up of the money with Swiss banks but we do know that the total amount in the country's banks is around 2,100 billion francs. And half of this amount belongs to institutional clients," Calmy-Rey said in reply to a query that close on to $1.4 trillion in Indian black money was parked in Swiss banks. If half of the $2,050 billion is institutional money, the Swiss foreign minister said, the unaccounted-for money stashed abroad would be a little over $1,025 billion. Even if Indians account for 50% of this figure, their share would come to only $500 billion.
    Rajya Sabha MP Ram Jethmalani, who has maintained in SC that government can't claim immunity from disclosing documents related to black money in Swiss banks, said last week that $1,500 billion in black money was lying in Swiss banks.

    Calmy-Rey also made it clear that the information under the revised agreement could be subject to conditions stipulated by OECD.
     
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  2. Bhushan

    Bhushan SENIOR MEMBER

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    India, Switzerland sign revised taxation treaty

    NEW DELHI: India and Switzerland on Monday signed a treaty that will enable exchange of information on tax evaders, considered a must for getting details on unaccounted funds stashed away by Indians in Swiss banks.

    The treaty is a revised version of the existing Double Taxation Avoidance Agreement between India and Switzerland and was signed by visiting Swiss Foreign Minister Micheline Calmy-Rey and Finance Minister Pranab Mukherjee.

    Though the two leaders did not take queries from media persons, the Switzerland government and banks have been insisting that the exchange of information as per OECD norms could only take place after signing a revised treaty.

    Black money has become a major political issue in India, with the the government promising to take every possible step to bring back this unaccounted or criminal money. Mukherjee is expected to make a statement on the agreement in Parliament tomorrow.

    Later, the Finance Ministry said in a statement, "A protocol amending the existing Double Taxation Avoidance Agreement was signed here today between Republic of India and Swiss Federal Council."

    Besides the two dignitaries, Finance Secretary Ashok Chawla, Revenue Secretary Sunil Mitra, Chief Economic Advisor Kaushik Basu and Swiss Ambassador Philippe Welti were also present on the occasion.

    The Swiss Federal Department of Finance (FDF) said in a separate statement, "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 issue of Indians having secret Swiss bank accounts is a hot political topic 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. The Paris-based OECD sets 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 the bank accounts of tax evaders.

    Earlier in the day, when asked about the terms of 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.

    The sources said the revised treaty will make it possible for Switzerland 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 revised treaty would also 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 DTAAs with as many as 79 countries, but none of them has provisions for exchange of information related to taxation.
     
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  3. Bhushan

    Bhushan SENIOR MEMBER

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    In 2006, the most recent Global Financial Integrity study, developing countries lost an estimated $858.6 billion (about Rs 43 lakh crore) to $1.06 trillion (abot Rs 51 lakh crore) in illicit financial outflows. Even at the lower end of the range of estimates, the volume of illicit financial flows coming out of developing countries increased at a compound rate of 18.2 percent over the five-year period analysed for the study. On average, for the five-year period of this study, Asia accounts for approximately 50 percent of overall illicit financial flows from all developing countries.

    This report shows that the average amount stashed away from India annually during 2002-06 is $27.3 billion (about 136,466 crore). It means that during the five-year period the amount stashed away is 27.3x5=136.5 billion (about 692,328 crore). It is not that all these amounts went to Swiss banks. It has gone to different tax and secret shelters. The share of Swiss banks in dirty money being a third of the global aggregate, some $45 billion out of the 136.5 billion stashed away from India would have been hoarded in these years in Swiss banks.

    The important point is that this is only for five years. More amounts were stashed away during the Nehruvian regime. So the loot for 55 years will be several times higher. In fact, in those days the rupee commanded a better value per dollar. So fewer rupee could get more dollars. So the estimation that the Indian money stashed away may be of the order of $1.4 trillion (about Rs 71 lakh crore).
     
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  4. Bhushan

    Bhushan SENIOR MEMBER

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    Get the money back and use it for the poor people,health and education.
     
  5. CardSharp

    CardSharp ELITE MEMBER

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    :tup: India, get those corrupt bastards.
     
  6. fallstuff

    fallstuff SENIOR MEMBER

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    UBS has struck a deal with the US Government to give up 52,000 names of Americans who have Swiss bank accounts.

    Good work by the Indian Government.
     
  7. Devianz

    Devianz FULL MEMBER

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    Excellent... Time to nab those corrupt rascals.:yahoo:
     
  8. jha

    jha ELITE MEMBER

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    Who will nail whom....???
    Get over it..nothing gonna happen..