India may ink pacts with nine territories on tax evasion

Amid its efforts to seek information on black money, the government has identified nine territories, including tax havens like Cayman Islands and Bermuda, with which it may negotiate treaties to seek information on tax avoidance.

Hitherto, India enters into tax agreements with countries only, but after the amendment in Income Tax Act in the Finance Act, 2009, the government can also enter into agreement with "specified" regions.

In this regard, nine areas were approved by the government as "specified territories", an official statement said today.

Besides Cayman Islands and Bermuda, other areas are British Virgin Islands, Gibraltar, (all British Overseas Territories); Guernsey, Isle of Man, Jersey, (all British Crown Dependencies); Netherlands Antilles (an Autonomous Part of the Kingdom of Netherlands); and Macau (a Special Administrative Region of the People’s Republic of China).

"The central government can, now, initiate and negotiate agreements for exchange of information for the prevention of evasion or avoidance of income tax and assistance in collection of income tax with these nine specified territories," the statement said.

Also, the process of identifying Hong Kong is on, an official statement said here today.

Currently, India is renegotiating its tax treaties with a host of countries, including Switzerland, to seek information on black money.

Leading tax expert Aseem Chawla said the statement reflects that the government is serious in tackling undesirable tax practices.

"The statement identifies certain offshore financial and tax centres, which can be associated with given geographies. It will further objectives like avoiding tax evasion, exchange of information etc," he said.

Consultant KPMG Executive Director Sanjiv Chaudhary said the move is aimed at ensuring that there is no leakage of taxes and to exchange information on tax avoidance.