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Noose tightens on tax haven funds

Finance minister Pranab Mukherjee on Friday told delegates at the Hindustan Times Leadership Summit that India has written to 78 countries to amend existing tax treaties, insisting on their adding on Article 26 of the Model Tax Convention of the Organisation for Economic Cooperation and Development. HT reports.

business Updated: Nov 20, 2010 01:53 IST
HT Correspondent

The government is hard on the trail of money allegedly stashed away in secret bank accounts in tax havens.

Finance minister Pranab Mukherjee on Friday told delegates at the Hindustan Times Leadership Summit that India has written to 78 countries to amend existing tax treaties, insisting on their adding on Article 26 of the Model Tax Convention of the Organisation for Economic Cooperation and Development (OECD).

"We are regenotiating the double taxation avoidance agreements (DTAAs) with 78 countries," Mukherjee said.

He said the government has also finalised tax information exchange agreements (TIEAs) with eight countries.

"Once this is institutionalised, we can analyse how much the quantum (of black money is stashed away in secret accounts) would be,"” he added.

"I would not know the actual estimation of black money or unaccounted money stored in other countries," he said.

Global Financial Integrity, a Washington-based research group, says India is losing about $16 billion (Rs 72,496 crore) a year to outflows related to tax avoidance by wealthy individuals and companies, besides money lost to corruption.

It has estimated that India has been drained of $462 billion (over Rs 20 lakh crore) between 1948 and 2008 at current prices. This is nearly 40% of India’s gross domestic product.

"My department is examining it ( the study)," Mukherjee said.

"Adequate measures would be taken to nip it in the bud as soon as possible as it could affect growth. It is definitely a matter of concern," he said.

He said no estimates have been made on the amount of slush funds from India stashed away in Swiss Banks. "It was estimated way back in the mid-1980s, in a government sponsored study," he said.

In August, India and Switzerland inked an amended tax pact.