Switzerland to share tax information with India, other nations
October, 18th 2013
Think twice, if you are considering buying a property in Switzerland or making any investment or banking transaction to avoid tax authorities in India. Chances are that the information may be automatically shared with the Financial Intelligence Unit (FIU) here and you may face prosecution for tax evasion.
Switzerland may no longer guarantee protecting your investment details under its historical secrecy clause after it became signatory to the Paris-based Organisation for Economic Cooperation and Development's (OECD) multilateral convention on mutual assistance on tax matters.
India is among 58 countries that are signatories to the OECD mutual tax information-sharing convention. But for automatic information sharing, India will have to sign another pact with the Swiss government. Though it has a Double Taxation Avoidance Agreement (DTAA) with Switzerland, it may not be adequate.
On October 15, Switzerland signed the OECD's multilateral convention on mutual administrative assistance in tax matters that provides for sharing of investments details with member countries automatically.
India has been getting information from several other countries on its citizens who have made investments abroad — some of which may be legal — through this automatic route. One such information from France and later Denmark and Finland had details of over 2,000 bank accounts of Indians in those countries. France had even shared a list of 700 Indians' bank accounts in Geneva-based HSBC Bank, which was part of a stolen data.
This information was passed on to the Income Tax's Investigation units for further investigation. The details of 700 accounts in the Geneva bank had thrown up several surprising names, where high-profile industrialists and politicians have been found to have made huge deposits.
India had amended its DTAA with 81 countries and signed tax information exchange agreement with some tax havens for automatic exchange of information. But even after a revised DTAA with the Switzerland, it was not possible for automatic exchange of information on all investments made by Indians there as it first required a case to be registered in India for such exchange of information. However, with the Switzerland becoming signatory to the OECD's multilateral convention, it would be possible to receive information on any Indian investing in that country.