This means the Indian government will now find it easier to access information on Indian account holders in Swiss banks. Earlier on Monday, finance minister Arun Jaitley said in response to a news report that the Swiss were preparing such as list his ministry planned to approach the Swiss government for a list of such account holders.
The referendum deadline will expire on 10 July 2014, and no referendum has been called to date. If that remains the case, the amended act will enter into force on 1 August 2014, the website of the State Secretariat for International Finance Matters (SIF) said.
The Act will make it possible for the Swiss government to override several provisions of secrecy rules that banks in that country deploy to keep the ownership of their account holders a secret from prying countries. The last date for cantons to give a notice for referendum is July 10 but since it requires signatures of at least 50,000 people in a 100-day period, the chances of the Act not going through now are remote.
The country has been under tremendous pressure from the international community to share information on these bank accounts, many of which are often allegedly used by people and institutions to evade taxes in their respective countries.
New Delhi has repeatedly asked the Swiss government to share information on such bank accounts allegedly held by Indian nationals in banks in that country without paying taxes on them. But Bern has pleaded that while it is keen to help India, it cannot transgress its domestic laws to share such information. India, for instance, has asked for information it received on an alleged set of HSBC accounts obtained from third-party sources, but the Swiss government has maintained it cannot act on stolen data. This act will allow Zurich to bypass this restriction.
The Swiss Tax Administrative Assistance Act cleared by its Parliament proposes to amend domestic laws in line with international standards for tax transparency. Through passage of this act Switzerland will comply with the applicable international standard for administrative assistance in tax matters as well as (comply with) additional recommendation of the Global Forum on Tax Transparency, the website notes.
Under Swiss law, any change in a statute has to be cleared by the process of referendum. The last time its federal government had passed a similar law it was struck down in October 2013 as it met with strong opposition during the consultation, a Swiss finance ministry web post notes.
The development comes on the same day when Jaitley told the media he would write to the Swiss finance minister for information on tax evaders. We are today writing ourselves to the Swiss authorities with whom the ministry has been in touch so that details with regard to whatever information the authorities have can be expedited and the cooperation between the Swiss authorities and the government of India can bring fruitful results, Jaitley said. He made the comments after agency reports from the European country claimed that it had recently shared new information with the tax department in India.
But the Swiss finance ministry, despite promising help in Indias fight against tax evasion, made it clear it has not shared any fresh information with New Delhi since a high-level Swiss delegation met with its India counterparts in..February 2014.
The response adds that no further official meeting has taken place. There is no new development to be reported.
In its first cabinet decision, the Narendra Modi government has set up a special investigation team (SIT) to track black money abroad. The SIT headed by former Supreme Court judge MB Shah has asked the finance ministry to expedite information from tax havens on alleged Indian offenders. The problem for India stems from the fact that while Switzerland refuses to entertain requests based on stolen data, the double taxation avoidance agreement with the country revised in 2011 has only prospective effect. It does not allow India to ask for details of accounts already held there, since it violates existing Swiss laws.