India has amended a Double Taxation Avoidance Agreement (DTAA) with Singapore to allow for exchange of information in tax matters. Banking information would also come under the ambit of the new agreement. This would help India track assets illegally stashed away in Singapore.
Recently, while investigating into the tax evasion case of Pune-based businessman Hasan Ali, the Income Tax Department had sought some information from the Singapore branch of an Indian public sector bank. The information, however, was denied citing banking secrecy as per the law of Singapore. The amended treaty would help get information in such cases.
“The government of India signed a protocol, amending the DTAA with the government of Singapore for effective exchange of information in tax matters on Friday. The protocol was signed by Prakash Chandra, chairman, Central Board of Direct Taxes, and Karen Anne Tan Ping Ming, High Commissioner of Singapore to India,” the finance ministry said in a statement on Friday.
The negotiations for entering into an amending protocol were completed in one round at Singapore. The protocol is based on internationally agreed standards for exchange of information in tax matters. It includes the principles incorporated in the new paragraphs four and five of the Organisation for Economic Co-operation and Development (OECD) model.
The Article on ‘Exchange of Information’ in OECD Convention requires exchange of information on request in all tax matters for the administration and enforcement of domestic tax law without regard to a domestic tax interest requirement or bank secrecy for tax purposes.
In the aftermath of the global financial crisis, there is increased recognition on part of governments that improvements in exchange of information in tax matters are a part of a broader agenda to improve transparency and global governance.
There is recognition that effective and comprehensive exchange of information in tax matters is a vital part of the ongoing efforts of revenue authorities to tackle international tax avoidance and evasion.
“Towards that end, India and Singapore joined hands for effective exchange of information including banking information. This amending Protocol will go a long way in strengthening the relationship between India and Singapore and facilitate mutual cooperation by effective exchange of information in tax matters between two countries,” the ministry said.
Most of the new DTAAs India is signing with other countries are based on the OECD model and provide for sharing of information. Information on past transactions is still not shared. Finance Minister Pranab Mukherjee had recently raised this issue at an OECD conference.