The Finance Minister P Chidambaram has come down heavily on Switzerland for not honouring the terms of the double taxation avoidance convention (DTAC) between the two countries and denying access to vital information on bank accounts held by Indians in this Alpine country.

Any continued denial of access to vital information, including banking information which Switzerland is obliged to provide under DTAC, may compel India to actively consider the options available under domestic laws, Finance Minister P Chidambaram said in a stern two-page letter written to his Swiss counterpart last week.

The steps contemplated under Indian domestic laws may include declaring Switzerland as a non-cooperative jurisdiction, say tax experts.

India had few years back armed itself with powers to declare certain jurisdictions as non-cooperative jurisdictions, it was pointed out.

When asked if India was contemplating any move to declare Switzerland as a non-co-operative jurisdiction, Central Board of Direct Taxes Chairman R K Tewary declined to comment.

Global forum, G20

“If information continues to be denied to India under the DTAC, the Indian Government will be constrained to take a position in the Global Forum that Switzerland still does not comply with the standards of transparency and that the required legal and regulatory framework (examined in phase I) is still not in place Switzerland”.

New Delhi may also have to raise this issue of non-cooperation by Switzerland in other multilateral fora such as the G20, the strongly-worded letter said.

Switzerland’s refusal to provide information to India and other countries on the ground that the source of the information requested was based on “stolen data” means that Switzerland, in practice, believes in bank secrecy and is therefore not in tune with modern era.

The G20 leaders had declared in London in April 2009 that the “era of bank secrecy” was over, the letter pointed out.

Closing the requests

Indian tax authorities are upset that Switzerland was closing the requests made by India on 562 cases, citing their domestic laws for their inability to share details on bank accounts.

Swiss Government had earlier proposed revision of its domestic law—Swiss Administration Assistance Act, which would have enabled Switzerland to provide information to India in the HSBC cases even in respect of the so-called ‘stolen data’.

The proposed revision however did not take place due to strong political opposition in Switzerland.

India however maintained that it had not obtained the data in an un-authorised manner and that Switzerland was obliged to share information under DTAC.

Chidambaram has urged his counterpart to re-examine the matter and convey the decision of the Swiss Government at the earliest.

The Swiss Government should be able to persuade the Swiss Parliament to agree to the proposed changes in its domestic (Swiss) law, Chidambaram’s letter noted.

A bilateral discussion at the official level held in New Delhi on February 4-5 led to deadlock.

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