Black money: Swiss ready on tax info, clock ticks
On October 7, Swiss ambassador Philippe Welti will write a note to the Indian government saying that the Alpine nation is ready to ratify the amended double taxation avoidance treaty and share tax information with India. With that, the black ball of money will bounce back into India’s political court from Switzerland. Gautam Chikermane reports. | Deciphering the number gamebusiness Updated: Sep 22, 2011 10:41 IST
On October 7, Swiss ambassador Philippe Welti will write a note to the Indian government saying that the Alpine nation is ready to ratify the amended double taxation avoidance treaty and share tax information with India. With that, the black ball of money will bounce back into India’s political court from Switzerland.Once the two governments decide the date of ratification, India can request the Swiss government for release of bank data, Welti told Hindustan Times at his Chanakyapuri residence. "We will examine the request formally and if everything is as per rules, we will share the information."
The India Swiss treaty — that will be enforceable on Indian black money in Swiss banks after January 1, 2011 — would be different in two ways, he said.
One, it will include tax evasion as well as tax fraud. "Tax fraud is a crime, but tax evasion could happen to anyone by mistake. We don’t think tax evasion is a crime," he said.
And two, the information requirements have been reduced. "The Indian government should give us the bank account number or the name of the person," Welti said. "The treaties concluded in the past were stricter when many governments found the information we sought difficult to give."
The BJP pushed for action. "The government should take the fullest advantage of this new opening," former finance minister Yashwant Sinha told Hindustan Times. "If the government still does not give the names of the people suspected of tax evasion and covered under the new dispensation, its motives will be suspect."
But even giving names could be difficult. For instance, the account could be in the name of a company registered in another country. "There may be cases where ownership is very complex," Welti said. "But don’t blame Switzerland for it. As far as we are concerned, the assets must be located in Switzerland and they must be identifiable."
How does it feel to be a country that is known as a safe haven for black money? "We are not for protecting the interests of tax evaders," he said. "We are interested in the rule of law."
Welti dismissed reports about the $1.4 trillion (Rs 6,720,000 crore) of Indian black money being stashed away in Swiss banks. "This is a ridiculous figure," he said. "Take any economic indicator and it will be impossible to go with this figure. This number could be representing Indian money worldwide, not in Switzerland alone. As per our estimates, the money owned by Indians in Switzerland is $2 billion (Rs 9,600 crore)."
"The exchange of information clause is a welcome development and will improve transparency in financial transactions," said Atul Dhawan, partner, Deloitte Haskins & Sells.
The treaty has come a long way from the June 2011 meeting of finance minister Pranab Mukherjee with the Swiss minister of economic affairs Johann N. Schneider-Ammann, during which Schneider-Ammann had promised an early ratification of the treaty. With two weeks left, it is time the Indian government began to make its first list of tax evaders.