India steps up pressure on Switzerland for sharing tax-related information

Irked by non-corporation, India has warned Switzerland that reluctance on not sharing tax-related information may impact the economic co-operation between the two countries.

The Government is pressing hard to get information about the account details of certain Indians at HSBC’s Swiss bank branches, in whose cases ‘incriminating evidence of tax evasion’ have been found here.

But the Swiss authorities are reluctant in sharing the information. After this, the Finance Minister P Chidambaram has sent a strongly worded letter to Swiss Finance Minister Eveline Widmer Schlumpf.

“Effective exchange of tax-related information is an extremely important constituent of the economic co-operation between India and Switzerland and the rights and duties agreed to in the DTAC (Double Taxation Avoidance Convention) between our two countries in regard to such exchange of information should be fully understood and honoured by Switzerland,” Chidambaram wrote in a letter dated April 29. This is in reply to Swiss Minister’s letter sent on April 7.

He again reiterated that India would continue to take a position at the Global Forum about Switzerland lacking legal and regulatory framework for an effective exchange of information. He also said that the interpretation made by Switzerland that it cannot share information as per India’s request was not in accordance with international standards.

Banking secrecy laws

Switzerland communicated its decision against sharing the information pursuant to which India has now stepped up its pressure on the European nation, which has been long perceived as a major safe haven for alleged black money stashed by Indians and other foreign nationals due to its strong banking secrecy laws.

Under global pressure, Switzerland has agreed to ease its banking secrecy laws in recent years and it also signed a revised tax treaty with India in 2011 to facilitate greater flow of information about alleged black money.

‘HSBC list’

However, it has refused to share information with India about the accounts mentioned in the so-called ‘HSBC list’ which India had received from France through a bilateral treaty.

It may be noted that France had received the list after the data was stolen by a disgruntled HSBC employee in 2011 and those names eventually found their way to tax authorities across the world, including India.

The Finance Minister further said Switzerland was putting unusual pre-conditions for sharing information which appear to be ‘intended to refuse assistance’ and such refusal amounts to Swiss authorities providing protection to the people ‘found to have evaded Indian taxes’.

‘Stolen data’

Switzerland has rejected India’s request on the pretext that the information was being sought on the basis of stolen data and it claims that its local laws do not permit exchange of information in such cases where some criminality may be involved for getting the data.

Countering Switzerland’s claims, Chidambaram said that India’s request “is based on data obtained legally under a DTAC with a third country and India is not party to commission of any criminal offence in Switzerland in this regard“.

Earlier this year, a Swiss delegation had come to India to discuss such cases, but not much headway could be made. Referring to that visit, Chidambaram said he had hoped that Swiss delegation would be willing to consider options that would enable exchange of information even in the HSBC cases.

For instance, it was demonstrated to the Swiss delegation that in several of these cases, the Indian tax authorities had gathered incriminating evidence of tax evasion through their own investigation and actions.

Accordingly, it was suggested by the Indian side that the information requests should be considered independently of the stolen data issue.

“However, Swiss delegates insisted on a pre-condition that India needs to demonstrate that the investigation carried out in these cases was initiated independently of the HSBC data and was based on information already available with the Indian authorities prior to receiving the HSBC data from France,” he wrote.

Chidambaram acknowledged that he was aware of Switzerland Government’s failure to modify its laws due to political opposition there.

It may be noted that Switzerland’s envoy to India Linus von Castelmur had also said here on Thursday that there was a kind of “national resistance” in his country against giving information in cases of black money which have been sourced from ‘stolen data’.