India signs tax information exchange pact with Bermuda

India today signed a Tax Information Exchange Agreement with Bermuda, the first in a series of such pacts.

Officials in the tax department said pacts with at least eight other traditional tax havens had been finalised and would be signed soon. These are the Bahamas, British Virgin Islands, Isle of Man, Jersey, Cayman Islands, St Kitts & Nevis, Monaco and Argentina.

A department official said the Bermuda agreement will help the government track some transactions of a low-profile businessman who was alleged to have siphoned off nearly Rs 40,000 crore from the country. Similarly, some cases involving the Indian Premier League are thought to have links with Bermuda, located in the North Atlantic, just off the US coast.

The agreement was signed by Union minister of state for finance S S Palanimanickam and Ewart Brown, premier of Bermuda. Among other things, it provides for exchange of information on criminal tax matters. There is a provision for providing banking and ownership information.

The agreement also comes with certain safeguards. For instance, the information sought must be relevant to the administration and enforcement of domestic laws. The country requesting the information has to provide some detail to justify the relevance criteria. Information is to be treated as secret and to be disclosed to only specified persons or tax authorities or its oversight body. The agreement also provides for other disclosure with prior consent.

“The agreement is important in the perspective of efforts made by the global forum to build an effective system for exchange of information around the world,” Palanimanickam said.