Prime Minister on Black Money

NEW DELHI: India has prioritised a list of 20 countries and jurisdictions for negotiation of tax treaty facilitating exchange of information on ill-gotten wealth. Stating this in Parliament on Friday, PM Manmohan Singh said negotiations have been concluded with some of them. 

"Negotiations have been completed with Bahamas and Bermuda and steps are being taken for signing of agreements. We have also approached Switzerland for renegotiation of our tax treaty so that we can have access to bank information," he told the Lok Sabha. 

He said with Switzerland a new protocol is being worked out through which India would be able to obtain information in specific cases. 

The government has authorized Financial Intelligence Unit (FIU) to enter into memoranda of understanding with FIUs of other countries to exchange information pertaining to money laundering and terror funding. 

The Indian FIU has already signed agreements with Mauritius, Philippines, Brazil, Malaysia, Russia, Australia and Canada for sharing information with their FIU. Recently, India also entered into an agreement with China and Vietnam on sharing of information relating to money laundering. 

However, officials involved with treaty negotiations and those seeking information on specific cases of tax evasion have bad experiences to relate. Banking authorities in Switzerland and other such jurisdictions considered as tax havens have in the past refused to divulge any details on individuals for whom investigative agencies have demanded information. 

India has comprehensive and restricted tax treaties with at least 85 countries. The government is in the process of finalising agreements with some of the tax havens, such as Bahamas and Bermuda, with which it has no treaties so far. The government has also proposed revising tax treaties with almost all the countries with which it has Double Taxation Avoidance Agreements (DTAA), introducing the disclosure elements necessary to identify tax evaders. 

The PM's assertion in Lok Sabha on Friday was in response to senior BJP leader L K Advani's demand for a white paper on the progress made so far to recover black money from abroad. 

The government has no estimate of the kind of black money Indians have parked abroad. Recently, it came across big tax evasion cases in which the accused had been operating bank accounts in Switzerland, British Virgin Island, Cayman Island and other such jurisdictions infamous as tax havens. 

Besides, the government is also grappling with another major issue in which some of the Indian entities have been found round-tripping their money through some of these jurisdictions. Investment outflows between 2006-07 and 2008-09 to a handful of these countries amounted to billions of dollars. Among them were Singapore, Mauritius, Isle of Man, Switzerland, British Virgin Island, Hong Kong, Bermuda and Cayman Island. And these were the destinations from where some of the big Indian entities also received huge investments in terms of FDI. 

6TH MARCH, 2010 TIMES OF INDIA



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