Bringing back black money: Swiss promise India details in time-bound manner

erne/New Delhi: In a major breakthrough in India’s fight against black money allegedly stashed abroad, Switzerland today said it will examine Indian requests for banking information on a priority basis and provide requested details in a time-bound manner.

The Swiss authorities would also “assist in obtaining confirmation on genuineness of bank documents on request by the Indian side and also swiftly provide information on requests related to non-banking information”.

“… the Swiss competent authority will provide the Indian side with the requested information in a time-bound manner or else indicate the reasons why the cases cannot be answered within the agreed timeline,” a Swiss-Indian joint statement said after a high-level meeting between the officials of the two countries on tax matters.

The meeting took place in Berne between Revenue Secretary Shaktikanta Das and his Swiss counterpart, State Secretary for International Financial Matters, Jacques de Watteville.

They discussed various bilateral and multilateral tax and financial issues and also agreed on continuing the dialogue between the two countries, a statement from Swiss government said.

Das stressed on the high priority given by India to tackling tax evasion, while the top officials of the two countries also welcomed the recent developments in the field of international taxation, including the new international standard for automatic exchange of information (AEOI) and the BEPS (Base Erosion and Profit Shifting).

They also “reaffirmed their countries’ commitment to combating tax fraud and evasion within the applicable legal framework”.

There has been a huge political uproar over huge amounts of black money allegedly stashed by Indians in Swiss banks and the new government has maintained that it would make all efforts to tackle this menace.

As per Swiss National Bank’s latest data, the total money held by Indians in Swiss banks stood at over Rs 14,000 crore as on December 2013, up by nearly 42 per cent from a year ago.

Today’s meeting, which assumes significance in the wake of Switzerland repeatedly rejecting India’s requests for information on so-called HSBC list, followed a Swiss delegation’s visit to New Delhi in February 2014 and was the first high-level meeting between the two countries’ tax and financial authorities since the new Indian government took up office in May this year.

India has sought information on bank accounts and other details of the persons named in this list, but Switzerland has been refusing to cooperate saying these names were obtained “illegally” or through sale of stolen data by a hacker.

With regard to the application of the Swiss-Indian Double Taxation Agreement as revised by the Protocol of August 30 2010, both sides acknowledged the progress achieved in the bilateral cooperation between the two countries while noting there were still ongoing discussions on certain issues.

Das and Watteville reaffirmed their respective positions in this regard, while the Swiss officials “indicated that Switzerland would be willing to examine requests for which investigations have been carried out independently from what the Swiss government considers as data obtained in breach of Swiss law.

Adrian Hug, Director of the Swiss Federal Tax Administration, agreed that the Swiss competent authority would assist in obtaining confirmation of the genuineness of bank documents on request by the Indian side and also swiftly provide information on requests related to non-banking information.

“In order to deal expeditiously with pending cases, Das agreed to indicate to the Swiss competent authority which cases should be dealt with as a matter of priority and to give additional information where appropriate.

“On this basis, the Swiss competent authority will provide the Indian side with the requested information in a time-bound manner or else indicate the reasons why the cases cannot be answered within the agreed timeline.

The Swiss government said that the Das and Watteville also discussed “bilateral and multilateral topics related to fiscal and financial matters”.

“Noting with satisfaction the strong economic ties linking India and Switzerland, they agreed that the ongoing dialogue between the two countries offers a great opportunity of working together in the future,” the joint statement said.

“As a matter of principle, the Revenue Secretary (of India) and State Secretary (of Switzerland) decided that the competent authorities of the two countries should continue their regular consultations to come up with effective and pragmatic solutions agreeable to both sides in accordance with their legal order and international obligations.

“Das and Watteville acknowledged AEOI as an effective instrument to tackle tax fraud and evasion on a global scale. They recalled that India belongs to the group of the early adopters.

“They noted with satisfaction that the Swiss Federal Council has confirmed to the Global Forum on transparency and exchange of information for tax purposes (Global Forum) its intention to have the necessary laws in place to implement the new standard by 2017/2018 without prejudice to Switzerland’s parliamentary approval procedure,” the joint statement said.

Watteville noted India’s wish to engage in discussions aimed at concluding an AEOI agreement between India and Switzerland, which last week said that it would initially focus on the US, Europe and “selected countries” with close bilateral ties for automatic exchange of information.

India does not figure among these countries so far.

While referring to the parameters defined by the Swiss Federal Council in approving the negotiation mandates on 8 October 2014, Watteville assured Das that Switzerland would commence talks with India in this regard at the earliest after completion of its domestic procedures.

The joint statement said that two officials also acknowledged the important role played by the Global Forum, an international body for cooperation in matters related to suspected tax evasion cases, in fostering tax compliance worldwide.

“In view of the forthcoming plenary meeting of the Global Forum in Berlin, India acknowledged Switzerland’s view that the Global Forum should offer a fair and equal treatment of all jurisdictions undertaking a peer review.

“In this regard, Das noted the progress achieved by Switzerland in the peer review process in the context of Switzerland’s supplementary report.

“Revenue Secretary Das and State Secretary de Watteville agreed to continue the ongoing dialogue between India and Switzerland on tax and financial matters in a spirit of mutual cooperation,” it added.

Earlier this morning, Swiss Ambassador in India, Linus von Castelmur had said in New Delhi that his country is fully co-operating with the authorities here on tax matters.

An Indian delegation, led by Das, is visiting Berne to meet Swiss officials as both sides look to resolve tax matters, including those related to alleged illicit wealth stashed by Indian citizens in banks in Switzerland.

Emphasising that Switzerland is “fully co-operating with Indian authorities” on tax matters, Castelmur said the issues of the past should be addressed in a pragmatic way while respecting international obligations.

“We are very happy that Das is in Berne today and we wish him very good and for dialogue between the two delegations. We wish them well that issues will be solved… I think problems in the future would be solved very easily,” the Ambassador said.

The visit comes amid Swiss government previously refusing to share information on the list of names obtained by Indian authorities through other nations, namely France and Germany, saying they figured in lists stolen by certain ex-employees of the banks concerned and that no details can be shared on the basis of illegally-obtained information.

“We still have problems of the past and cannot make undone 20, 30, 40 years of the past. I think we have to work on that in a pragmatic way in respecting our international obligations but also our eternal rule of law,” Castelmur said.

Noting that Swiss authorities are fully co-operating with India, he said, however, there is a problem about requests on stolen data.

Besides today’s talks, a Joint Economic Commission meeting and a Financial Dialogue are also scheduled to take place in Berne soon, followed by a bilateral Political Dialogue next month.

Indian and Swiss authorities have been in talks for quite some time on the matter of alleged black money parked by Indian citizens in banks in Switzerland.

In July, Finance Minister Arun Jaitley had informed Parliament that Switzerland has raised some legal issues with regard to providing details of Indian citizens who have parked illegal funds in Swiss banks.

Asserting that the government was making all efforts to get details of such accounts, Jaitley had also said it was collecting evidence in this regard.

A Special Investigation Team (SIT), chaired by former Supreme Court judge Justice M B Shah, is looking into the menace of black money.