Aiming to curb tax evasion and avoidance, India has operationalised the Tax Information Exchange Agreement (TIEA) with Seychelles, one of the major sources of foreign investment into the country.
The agreement will enable the authorities of both nations to provide assistance through exchange of tax and banking information, which may be used to track fund flow originating from the Indian Ocean nation.
While the foreign direct investments from Seychelles have been small at just about USD 187.3 million (Rs 1,131 crore) over the last 16 years, the island nation has long been perceived as one of the preferred offshore havens for routing funds.
The TIEA, which was notified on September 8, 2016, would allow authorities of both countries to seek information held by banks or financial institutions.
Also, information regarding the legal and beneficial ownership of companies and partnerships can be sought.
Information received under the agreement shall be treated as confidential and may be disclosed only to persons or authorities concerned after assessment, collection, enforcement, prosecution or determination of appeals in relation to taxes covered under the agreement.
The agreement also provides for a Mutual Agreement Procedure to resolve any procedural differences.
The Agreement between India and Seychelles for the Exchange of Information with respect to Taxes was signed at New Delhi on August 26, 2015, between Prime Minister Narendra Modi and the visiting Seychelles President James Alix Michel.
TIEA would help curb tax evasion and provides for mutual assistance between the authorities of the two countries on enforcement action against suspected tax evaders.
India has signed similar bilateral agreements for Exchange of Tax Information with Argentina, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Macao, Monaco, Liechtenstein, and San Marino.