Competition among tax havens had created an unhealthy situation, helping individuals to park substantial undisclosed income outside their countries, denying government's legitimate revenues, finance minister Pranab Mukherjee said on Monday. The government was committed to vigorously pursue all necessary steps to curb the menace, he added.
The UPA government has been on the back foot over the issue of black money and has been criticised for its failure to bring back money stashed in foreign countries. The government has taken several steps to blunt the attacks which has seen civil society members taking to the streets. Mukherjee said there was a considered view that tax havens and low tax jurisdictions were important actors in the global financial crisis. The opaque system in these jurisdictions and restrictions on exchange of information in these tax havens and their non-compliant behaviour was a matter of serious concern, he said. "The concerns are not only on account of protecting revenue base but also linked to financing of activities which are detrimental to national security interest." He said the government was in the process of negotiating exchange of information agreements with tax, no tax or low tax countries.
The finance minister said India had also initiated process of re-negotiation with 65 countries to broaden the scope of provisions governing exchange of banking information and information without domestic interest. The government had finalized 14 Tax Exchange Information Agreements (TEIAs) and completed negotiations/renegotiations of Double Taxation Avoidance Agreements (DTAAs) with 36 countries in the last financial year.
"While countries have accepted to end bank secrecy in general, some countries have agreed to do so only from prospective date and are not willing to exchange past banking information," Mukherjee said, while addressing a tax conference organised by the Paris-based OECD — a group of 34 industrialised nations. "India is... suffering from the fact that some of its citizens are using some countries to put their money to avoid paying tax," OECD secretary general Angel Gurria said at the conference.
The OECD and India announced plans to strengthen ongoing cooperation on tax related issues through the development of a three-year partnership that will provide greater opportunities for dialogue and sharing of information. The finance minister said the Global Plan for Recovery and Reform, the statement of G20 leaders in London issued in April 2009, had called for action against non-cooperative jurisdictions, including tax havens.
"However, the spirit of this statement has not been respected. We cannot say with certainty that bank secrecy is over in all cases. While the countries have accepted to end bank secrecy in general, some countries have agreed to do so only from prospective date and are not willing to exchange past banking information. This puts a question mark on the efficacy of present legal provisions for exchange of banking information. There is an urgent need to revisit existing legal framework developed by OECD in this regard," the minister said.
The UPA government has been on the back foot over the issue of black money and has been criticised for its failure to bring back money stashed in foreign countries. The government has taken several steps to blunt the attacks which has seen civil society members taking to the streets. Mukherjee said there was a considered view that tax havens and low tax jurisdictions were important actors in the global financial crisis. The opaque system in these jurisdictions and restrictions on exchange of information in these tax havens and their non-compliant behaviour was a matter of serious concern, he said. "The concerns are not only on account of protecting revenue base but also linked to financing of activities which are detrimental to national security interest." He said the government was in the process of negotiating exchange of information agreements with tax, no tax or low tax countries.
The finance minister said India had also initiated process of re-negotiation with 65 countries to broaden the scope of provisions governing exchange of banking information and information without domestic interest. The government had finalized 14 Tax Exchange Information Agreements (TEIAs) and completed negotiations/renegotiations of Double Taxation Avoidance Agreements (DTAAs) with 36 countries in the last financial year.
"While countries have accepted to end bank secrecy in general, some countries have agreed to do so only from prospective date and are not willing to exchange past banking information," Mukherjee said, while addressing a tax conference organised by the Paris-based OECD — a group of 34 industrialised nations. "India is... suffering from the fact that some of its citizens are using some countries to put their money to avoid paying tax," OECD secretary general Angel Gurria said at the conference.
The OECD and India announced plans to strengthen ongoing cooperation on tax related issues through the development of a three-year partnership that will provide greater opportunities for dialogue and sharing of information. The finance minister said the Global Plan for Recovery and Reform, the statement of G20 leaders in London issued in April 2009, had called for action against non-cooperative jurisdictions, including tax havens.
"However, the spirit of this statement has not been respected. We cannot say with certainty that bank secrecy is over in all cases. While the countries have accepted to end bank secrecy in general, some countries have agreed to do so only from prospective date and are not willing to exchange past banking information. This puts a question mark on the efficacy of present legal provisions for exchange of banking information. There is an urgent need to revisit existing legal framework developed by OECD in this regard," the minister said.
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