Switzerland?s Social Democratic Party (SDP), the second largest in the Swiss parliament, has proposed that the Swiss government cooperate with the Indian authorities for sharing tax information of more than 700 account holders at HSBC Geneva. Significantly, that the information was based on data theft may not impede exchange of tax information, it has said.
The party has put forward a motion to this effect, Hans-J?rg Fehr, Social-Democrat and MP, told FE. The Swiss government is expected to respond within two months.
Fehr?s party has argued that it is necessary to exchange information regarding the HSBC Geneva accounts on the basis of the existing double taxation treaty. ?The new amendments to the double taxation treaty came into force in October 2011. However, the treaty itself was already signed on November 2, 1994. So all important information should be given to India on this basis,? Fehr said.
It appears that some of the information sought by India is related to account transactions dating back to 2007. It will depend on the interpretation of the government, in case it classifies these transactions as ?old?.
HSBC Geneva may well be functioning within the jurisdiction of Switzerland. The bank has said in the past that it does not condone tax evasion and that it seeks to comply with the law in all jurisdictions in which it operates. It holds individuals responsible for their own tax affairs. It was the French authorities that provided the information on more than 700 Indians who had opened accounts in an HSBC branch in Geneva before 2007. The names were received as a result of a data theft by a former employee of HSBC Geneva who handed over the information to the French government.
The money ? approximately R500 crore, according to media reports ? in the accounts was reportedly not declared in the income tax returns of the account holders. The SDP has said that the amendments in the double taxation avoidance agreement do not specify anything on stolen information. So this could never be an argument against the exchange of tax information as international treaties have always a legal priority. A national government cannot unilaterally decide that information requests for accounts based on stolen information will not be entertained, it said.
?As per the international treaty between India and Switzerland, stolen information is not out of bounds,? said Fehr, who is also a member of the Foreign Committee of the Swiss parliament. There is no court in Switzerland that already has an approved view on the legal procedure that debates and explains why stolen information in this case may not be valid,? Fehr added.
The party has suggested that the Indian government ask the Swiss government for information on the accounts based on precise details that justify suspicion of tax evasion. ?In our view, they do not need to specify how they got the information. It is for the Swiss government to decide on how to treat stolen information. But the Indian government is well within their rights to pursue possible cases of tax evasion based on suspicion, notwithstanding the source of information,? he said. It appears it may be very difficult for Swiss authorities to prove that all information in a specific request is stolen.
The political space to argue in favour of banking secrecy has become smaller given the international pressure. After the G20 meeting in Cannes and the recent conference in New Delhi, the movement is becoming even stronger. ?We are eager to have this debate. It is hard to argue why the Swiss government should not assist the Indian government with this request,? he said.