New Delhi: In a move that has implications for India's fight against
black money, the Swiss Government has asked its banks to prevent
acceptance of "untaxed assets" in their accounts without violating
client confidentiality."Banks' existing due diligence requirements are to be extended in order to prevent the acceptance of untaxed assets of foreign clients, including Indians, more effectively.
"The focus is on enhanced due diligence requirements for banks when accepting assets as well as a requirement for foreign clients to make a declaration on the fulfilment of their tax obligations," the Swiss Federal Council, the country's top policy-making authority has said.
However, it opposed the idea of 'automatic information exchange' with any other country, asserting the 'bank client confidentiality' should be respected as far as possible.
Swiss banks are known to have the strongest secrecy clauses globally, which have helped them attract the rich and mighty clients from across the world, but has also given them a 'tax haven' tag.
In a multi-pronged strategy aimed at removing this tag, the council has also proposed that all those past cases should be immediately settled, where assets of foreign clients of Swiss banks have not been correctly taxed.
The steps come on the back of growing international pressure on Swiss authorities to act against any possible hoarding of illicit and untaxed money in Switzerland-based banks by people from different countries, including India.
Earlier this month, the CBI Chief had said at a function that Indians are the largest depositors in Swiss banks. Within days, the Swiss Embassy said in a statement that such estimates and statistics lacked evidence and were uncorroborated.
The CBI Director A P Singh had also said that "it is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad".
While there have been various estimates of Indian black money stashed abroad, the statement by the CBI Director was significant as it was for the first time someone in authority in the country had come out with an estimate.
The Swiss Federal Council has asked its Department of Finance to prepare concrete measures by September, 2012.
The proposed steps include a greater international cooperation and taxation of investment income and capital gains for Swiss bank clients in the future.
"The Federal Council's aim is to create favourable framework conditions for the Swiss financial centre that boost its competitiveness and at the same time are accepted worldwide. Abuses of bank client confidentiality should be prevented insofar as possible," it said in a statement.
It has also proposed international withholding tax agreements for taxing the clients as per the regulations of their home country, while safeguarding their privacy.
"Despite the fact that some issues have not yet been fully resolved, there is international interest in this approach and it will be pursued by Federal Council beyond the agreements already negotiated with Germany and the UK," it said.
The Swiss authority has also proposed an improved administrative and mutual assistance in accordance with the international standards.
While proposing steps to comply with the various double taxation agreements, the Council also said that serious tax crimes should be taken into account in the fight against money laundering in the future.
It has also sought extension of due diligence requirements of financial service providers as a complementary component.
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