FM calls for global action to end era of secretive banking

Finance minister Pranab Mukherjee called for creating a multi-lateral cooperation mechanism to prevent banking secrecy laws to deal with menace of black money. HT reports.

Finance minister Pranab Mukherjee called for creating a multi-lateral cooperation mechanism to prevent banking secrecy laws to deal with menace of black money.

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"While countries have accepted to end bank secrecy in general, some countries have agreed to do so only from a prospective date and are not willing to exchange past banking information," Mukherjee said, while addressing a seminar on international taxation jointly organised by his ministry and the Organisation for Economic Cooperation and Development (OECD).

Mukherjee said transfer pricing poses problems with increase in cross border trade.

Under transfer pricing mechanism, money is transferred from one jurisdiction to the other at a specified rate for goods and services exchanged between related entities. Multinational companies use transfer pricing to minimise their worldwide taxes, duties and tariffs.

"The variety of inter-company transactions, increased global business restructuring and location of companies in various tax jurisdictions have brought several challenges to the tax administration on transfer pricing rules," he said.

Under attack for inaction over black money allegedly stashed away in secret overseas bank accounts, the government has announced setting up of a panel to suggest ways to trace tax defaulters, reveal their identity to the public and recover taxes.