India and Switzerland have signed a mutual agreement for easier access to information about Indians having Swiss bank accounts. This is considered to be an effective mechanism for tracking Indian money stashed abroad.
A Finance Ministry statement says, “Mutual Agreement between the Competent Authorities of the Republic of India and the Swiss Confederation for liberal interpretation of the identity requirements for providing information as per Article 26 of the Agreement for the Avoidance of Double Taxation (DTAA) with respect to income as amended by the 2010 Protocol was signed on 20{+t}{+h} April, 2012.” This will be effective from April 1, 2011.
Switzerland, now, has agreed to make a liberal interpretation of the identity requirements. 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 agreement would be beneficial to India as it gives a liberal interpretation to the identity requirements for exchange of information, which India will be seeking from Switzerland. It is also in line with international standards. The conditions, as clarified by Switzerland, will enable India to get information even if it has only limited details regarding the person having bank accounts in Switzerland.
Earlier, the requesting State had 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 would not have shared by the other country. This was a restrictive provision and not in line with international standards.
This move has come in the backdrop of a remark of the Director of the Central Bureau of Investigation that created a furor. The CBI chief, Mr A. P. Singh, on February 13 said, “India, in particular, has suffered from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein, the British Virgin Islands, etc. It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad. The largest depositors in Swiss banks are also reported to be Indians.”
However, Switzerland strongly refuted the Chief’s statement that it is a tax heaven. It also termed the premier investigation agency’s remarks about largest depositors in Swiss Banks reported to be Indian as ‘uncorroborated’ and ‘lacks evidence’.