Finance Minister P Chidambaram came down on Switzerland for not honouring the terms of the double taxation avoidance convention (DTAC) between the two countries and denying access to information on Swiss bank accounts held by Indians.
Continued denial of access to information, including banking data, which Switzerland is obliged to provide under the DTAC, may compel India to consider the options available under domestic laws, Chidambaram said in a stern two-page letter to his Swiss counterpart last week.
The steps under Indian laws could include declaring Switzerland a non-cooperative jurisdiction, say tax experts.
“If information continues to be denied to India under the DTAC, the Government will be constrained to take a position in the Global Forum that Switzerland still does not comply with standards of transparency and that the required legal and regulatory framework (examined in phase I) is still not in place in Switzerland,” Chidambaram wrote. India may also have to raise this issue of non-cooperation by Switzerland in other fora such as the G20, he added.
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 the idea of banking secrecy. In April 2009, G20 leaders had declared that the “era of bank secrecy” was over, the letter pointed out.
India has maintained that it did not obtain data in an unauthorised manner and that Switzerland was obliged to share information under the DTAC.
Indian tax authorities are upset that Switzerland was closing requests on 562 cases, citing its domestic laws.
The Swiss Government’s plans to revise its Administration Assistance Act, which would allow it to provide information even in respect of the so-called ‘stolen data’, failed politically.