“This shift from ‘information upon request’ to ‘automatic information exchange’ is a major breakthrough. But unless the loopholes are sealed, the big cats will still be able to get away,” Andres Knobel, analyst at Tax Justice Network, a coalition of researchers and activists against tax avoidance and havens, told HT from Berlin.
Thus far, India’s efforts to step up pressure for data have been futile. Bilateral treaties with banking secrecy jurisdictions are weak because they are mostly based on a system of “information upon request”. Requests for data are typically met with resistance as in the case of Switzerland saying India’s requests are beyond the ambit of the bilateral tax treaty.
“Switzerland’s laws say that requests must not be based on what is considered ‘stolen data’,” Mark Herkenrath, expert on tax policy at Zurich-based Alliance Sud, a platform for development policy by six Swiss organisations, told HT. “So requests based on the list India got from France in the HSBC case are seen as invalid.”
OECD’s new system of “automatic information exchange” is aimed at fixing such problems.
The OECD is expected to deliver a detailed “commentary” on the new standard, and announce technical solutions for the implementation of the system of information exchange, at a meeting of G20 finance ministers in September 2014.