|
| The citadel isn't crashing | | The US-UBS deal does not make it 'open sesame' for India |
| Business Standard / New Delhi Aug 20, 2009, 00:46 IST |
|
Once the US government and the Swiss bank UBS sign their historic deal, under which UBS hands over the account details of around 5,000 suspected US tax evaders, there will be a clamour for similar action from India. The US deal, some accounts say, will give the US government information relating to assets worth $10-15 billion, which are held abroad. And while UBS is just one bank, reports suggest that tax dodgers are responding positively to the government’s amnesty scheme which ends on September 23. So why can’t India lean on the Swiss to get access to similar information on Indian tax evaders? It is an important question, because the estimates of black money sent abroad each year by Indians ranges from $4.7bn to $22.7 bn.
But a close reading of the US-UBS case shows that the path ahead is nowhere as easy as was made out by BJP leader LK Advani, who made bringing back Indian money stayed away abroad an election campaign plank. The reason is simple: The UBS case was not the result of the US government leaning on the Swiss government, asking for information on US tax evaders, and threatening retaliation by not allowing (for instance) Swiss banks to operate in the US. The case resulted from a long tax investigation by the US revenue service, and then the filing of a case against UBS in a US court for helping US citizens evade taxes. It was when UBS felt the case was pretty strong that it decided to cooperate and paid $780 million to settle charges that it had helped US citizens evade taxes on $20 billion worth of funds that they had kept with it. Whether India is able to get the details of wealth held abroad by Indian residents will depend on its tax authorities proving that tax fraud was committed. It is important to understand that the US-UBS settlement is not the result of a wild-goose chase where UBS is going to hand over a list of all its account holders to the US government, which the US government will then check to see which one of them has evaded taxes. The seriousness of the US tax effort can be seen from the fact that President Barack Obama has asked Congress for money to hire an additional 800 agents/lawyers to target people who evade taxes and hide their money overseas. The US government is also pleading for a lenient sentencing of the ex-UBS staffer who helped it crack the case by providing vital leads on how to build a case against UBS.
Contrast this with how India handles its cases. There is, for instance, the political interference that led to the unfreezing of Ottavio Quattrochhi’s accounts, and the infamous voluntary disclosure of income (VDIS) amnesty scheme. These and other instances make it plain that the government lacks the will to go after serious tax evaders. The Comptroller and Auditor General’s report on VDIS gives details of how tax evaders were deliberately allowed to get away with paying taxes as low as 3-4 per cent of the value of money being declared, and no action was taken against officials who allowed this to happen. Switzerland’s walls of secrecy aren’t going to come down on their own.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
