In a step that is expected to make tracking down tax evaders easier and effectively combat the black money menace, the government on Monday announced that Switzerland had agreed to provide details of secret bank accounts of individuals sought by India even on the basis of “limited” information, under a mutual agreement inked on April 20 this year.
According to a Finance Ministry statement here, Switzerland has “agreed to provide liberal interpretation on the identity requirements, that it is sufficient if the requesting state identifies the person by other means than by indicating the name and address of the person concerned, and indicates to the extent known, the name and address of any person believed to be in possession of the requested information.”
This marks a significant easing of disclosure norms, as under the existing revised bilateral treaty signed under the Double Taxation Avoidance Agreement (DTAA), the requesting State has to compulsorily provide the name of the person under examination and the name of the foreign holder of the information as part of the identity requirements without which the information will not be shared by the other country. “This was a restrictive provision and not in line with the international standards,” the Ministry statement said.
The statement also noted that the liberal interpretation to provisions of Article 26 of the DTAA, as agreed upon in the mutual agreement, will apply from the date on which the amending protocol has come into effect, that is April 1, 2011. It may be recalled that India had signed an amending protocol with Switzerland to revise the bilateral taxation treaty under DTAA on August 30, 2010 and the revised treaty was approved by Swiss Parliament on June 17 last year. Subsequently, the proposal to seek liberal interpretation of the disclosure norms was approved by the Union Cabinet in March this year.
Pointing to the salient features of the mutual pact, the Ministry statement said the agreement was beneficial to India because it gives liberal interpretation to the identity requirements for exchange of information which India will be seeking from Switzerland and is in line with international standards. “The conditions, as clarified by Switzerland, will enable India to get information even if we have only limited details regarding the person having bank accounts in Switzerland,” it said.
The new agreement was signed by Sanjay Kumar Mishra, Joint Secretary (Foreign Tax & Tax Research division), Central Board of Direct Taxes (CBDT), and Juerg Giraudi, Head of Division of International Tax Affairs, Swiss Federal Department of Finance.