Indo-Swiss tax treaty hits bureaucratic hurdle

New Delhi, Jan 9 (PTI) The revised tax treaty between
India and Switzerland, to enable access to Swiss accounts of
tax evaders, seems to have hit bureaucratic hurdle as the two
governments are yet to notify each other on the required legal
and procedural approvals.
As per an agreement between the two countries, the
information exchange was expected to take effect on January 1.
However, Switzerland's Federal Tax Administration
department told PTI that the protocol, signed between the two
nations last August, was still to take effect as they were yet
to inform each other about extending the necessary approvals.
Finance Minister Pranab Mukherjee and Swiss Federal
Councillor Micheline Calmy-Rey signed a "protocol" to amend
the double taxation agreement in the area of taxes on
income on August 30, 2010.
"This Protocol has not entered into force yet, since the
governments of the Contracting States have not notified each
other through diplomatic channels that all legal requirements
and procedures for giving effect to the Amending Protocol have
been satisfied," a Federal Tax Administration spokesperson
said.
"In Switzerland the Parliament has not agreed upon the
protocol yet," the spokesperson said in an emailed reply.
The information exchange might now come into force from
the next fiscal, beginning April 1, 2011, if necessary
conditions are met by March-end.
"The exchange of information will be applicable for
information that relates to any fiscal year beginning on or
after the 1st January 2011, as soon as the protocol has been
given effect," the spokesperson added.
The revised tax treaty was expected to facilitate the
Indian government seeking details about illicit wealth
allegedly stashed away by Indians in Swiss banks.
The issue of Indians having secret Swiss bank accounts
has become a political hot potato, amid reports of Indians
having billions of dollars in banks in Switzerland. But, there
are no official figures as such.
The revised tax treaty agreement was reached after months
of negotiations, even as the Swiss banks have said that they
would not permit "fishing expeditions" -- meaning unwarranted
and indiscriminate trawling through bank accounts in the hope
of finding something interesting.
The Swiss Bankers Association have previously said that
any information exchange would be according to the conditions
set out by the Organisation for Economic Cooperation and
Development, the grouping of mostly developed nations,
and the information being sought should be specific in nature.
As per the revised treaty, Switzerland would now provide
administrative assistance in tax evasion cases also, in
addition to the tax fraud cases applicable earlier.