India has pledged to join a new convention of G20 countries on mutual administrative assistance (MAA), which will reinforce the UPA government?s plans to increase vigil on tax evasion and curb the flow of illicit funds overseas. The move comes at a time when India and Switzerland have nearly concluded the formalities for a revision of their bilateral tax treaty, allowing New Delhi to source information on specific Swiss bank transactions by Indians.
The government is under attack from the Opposition for its alleged inability to bring back black money stashed in Switzerland and other low-tax jurisdictions. It has also faced criticism from the Supreme Court and civil society on the issue.
Prime Minister Manmohan Singh told the G20 meeting here that tax evasion and illicit funds have seen the ?migration of tax bases in developing countries? and are ?serious problems?. ?The era of bank secrecy is over,? he said.
The G20 should send a strong message to curb tax evasion and fraud and take the lead in establishing systems for automatic exchange of tax-related information between countries, he said. The Prime Minister said that when it comes to the exchange of this information, no distinction should be made between past and present transactions.
China has also vowed to be party to the G20 convention on MAA that was signed to by a clutch of G20 countries ? Argentina, Brazil, Canada, Germany, Indonesia, Japan, Mexico, Russia and Turkey ? on Thursday. France, Italy, South Korea, the UK and the US had signed the convention earlier.
Economic affairs secretary R Gopalan said with a view to moving towards a more transparent regime on banking transactions, India has negotiated 19 new bilateral double taxation avoidance agreements and 17 new tax information exchange agreements. In addition, 22 existing agreements have been renegotiated, he said.
According to Swiss National Bank data, the total ?liabilities? of Swiss banks towards Indians were about R9,295 crore as on December 31, 2010. However, independent estimates, including one by a BJP task force in 2009 and another by Global Financial Integrity, had put the black money stashed away by Indians in Swiss banks at many billion dollars.