As India continues to grapple with the issue of black money stashed away abroad, help may finally be forthcoming in making the so-called tax havens fall in line. While G-20 is already in the process of finalising countermeasures to rein in these banks by March 2010, top officials of the French government confirmed to TOI that France will settle for nothing more than crippling sanctions on these banks by the Group if they don't respond to the calls for more transparency in their functioning by that time.
As per some estimates, India has around $1.4 trillion stashed away in these banks making it one of the main victims of the outflow of black money. According to Global Financial Integrity, a US-based thinktank, India is at the fifth position in the list of 160 countries affected by the outflow of black money.
"France is aware of the outrage in India over the issue. The G-20 has already made its position clear and we are going to insist that sanctions are put in place by March 2010 if there is no response from these tax havens," said a senior French official based in Paris.
"There is going to be a comprehensive list of sanctions. We will insist on entities not just not putting money in these banks but also severing all links with them to force them into making their functioning more transparent," he added.
As per estimates, almost half of India's black money abroad is lying in Swiss bank accounts and the remaining in tax haven countries with which India has signed double taxation avoidance agreements.
G-20 leaders agreed in April this year to name the tax havens in a list drafted by the Organisation for Economic Cooperation and Development (OECD) and threatened to impose sanctions on errant banks.
Switzerland, which is said to store a third of the total offshore wealth of all countries put together, is under pressure and has promised to ratify tax treaties to avoid penalties. In fact, it is already being talked about as a dilution of its famed bank secrecy laws. It is also renegotiating the double taxation avoidance agreement with India which was signed in 1995 and has said that the modified pact will help New Delhi seek and avail more information about Swiss bank account holders.