Pranab calls for global action to end era of banking secrecy

Finance Minister Pranab Mukherjee today called for stepping up multilateral cooperation to end the era of banking secrecy and deal with the "abusive" transfer pricing mechanism that is robbing developing nations of their scarce natural resources.

Mukherjee, while addressing a seminar on international taxation jointly organised by his ministry and the Organisation for Economic Cooperation and Development (OECD), regretted that the banking system is still opaque in various non-tax and low-tax jurisdictions.

Despite efforts made at the global level and statements issued by G20 leaders at their London summit in April, 2009, "We cannot say with certainty that the bank secrecy is over in all cases", the minister said.

"While the countries have accepted to end bank secrecy in general, come countries have agreed to do so only from a prospective date and are not willing to exchange past banking information," Mukherjee said.

Such issues put a question mark on the efficacy of the present legal provisions for exchange of banking information, he said, adding, "There is an urgent need to revisit the existing legal framework developed by the OECD in this regard".

The OECD is a club of developing countries and has been playing a key role in reforming the international taxation system.

Referring to the issues concerning transfer pricing, the minister said, "This abusive behaviour is robbing developing countries of their scarce resources, which is required for financing development programmes."