The government has approached Swiss authorities to renegotiate its Double Taxation Avoidance Agreement (DTAA), a tax treaty between the two countries in force since 1995, to obtain details of bank accounts maintained by Indians in Switzerland.
The Swiss government has in the past refused to share bank information pertaining to Indians with New Delhi on the ground that such details were not necessary for application of the DTAA. Swiss authorities had expressed inability to provide details, citing their own laws, since India’s requests were related to enforcement of its internal tax laws.
However, after the G-20 nations adopted a tough posture at their recently held London summit, seeking to bring tax havens and non-cooperating jurisdictions under close scrutiny, Swiss authorities expressed willingness to cooperate.
Just before the London summit, the Swiss confederation had told the Organisation for Economic Cooperation and Development (OECD) — a Paris-based group with 30 member countries including the US, UK and many European nations — that it was ready to withdraw its earlier reservation on sharing information and renegotiate its tax treaty with other governments.
But how effective the revised tax treaty will be is quite clear from a rider provided by the Centre in the affidavit it submitted before the Supreme Court on the subject last week. The affidavit said, “Even as per the OECD standards, unless specific information about the depositors becomes available, fishing or roving enquiry is not permissible.”
India is part of the task force constituted by the G-20 at its London summit to formulate a “global plan for recovery and reform which promises to take action against non-cooperative jurisdictions, including tax havens and also to deploy sanctions to protect public finances and financial systems”.
On alleged role of Swiss banks in the 2004 stock market crash, the affidavit said that Securities and Exchange Board of India had in 2005 barred Swiss financial institution UBS Asia from issuing and renewing any participatory notes for a year. But this was following its refusal to disclose information relating to an investigation carried out by Sebi, not for its role in the market crash.