Black money menace: Swiss exchanging 'lawful' info with India

New Delhi: 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 told PTI 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 February 17  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 USD 1.65 trillion to USD 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.   Paris-based OECD (Organisation for Economic Cooperation  and Development), sets the global tax standards.