'Prior approval must for prosecution under OECD pact'

Switzerland has signed the OECD pact which provides for sharing of tax information and mutual cooperation by signatories, but any penal action against money launderers and terrorists can be initiated only after obtaining prior sanction from the country that gave details.

 

Switzerland on October 15 signed OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters. India had joined the convention in 2012.

 

Switzerland singing the OECD pact is seen as major boost for India and other countries seeking details on suspected black money stashed in Swiss banks as it virtually pulled down the famed secrecy wall surrounding Swiss banks.

 

It would lead to Switzerland providing all forms of mutual assistance -- exchange on request, spontaneous information sharing, tax examinations abroad, and assistance in tax collection.

 

"What this convention essentially means is that while we would be able to get spontaneous financial information on request, get to do tax examination abroad and obtain assistance in tax collection, taxpayers' right is the cornerstone of the treaty.

 

Any penal action or efforts to probe laundering and terror financing cases will need a approval from the contracting nation," a senior Finance Ministry official said.

 

The confidentiality clause and the oath to keep the data classified after taking it from a partner nation is by and large in force in case of other treaties that India has signed as well, the official said.

 

India's two exclusive and standalone treaties with various countries-- the Double Taxation Avoidance Agreement (DTAA) and the Tax Information Exchange Agreement (TIEA) are also in place to do the rest of the job, another tax sleuth said.

 

Indian economic crimes investigators, however, say an increasing number of countries becoming a member of this agreement eases the preliminary hurdles in getting classified tax and financial data of a suspect or dubious entities being probed for tax evasion or economic crimes.

 

The multilateral convention "provides the option to undertake automatic exchange while requiring an agreement between the parties interested in this form of assistance.

 

"The convention has strict rules to protect the confidentiality of the information exchanged. It provides that information shall be treated as secret and protected in the receiving state in the same manner as information obtained under its domestic law but also with the safeguards that may be required to ensure data protection under the domestic law of the supplying party," the mandatory clause of the convention states.