Swiss relax rules for info exchange on foreign black money

At present, only name and addresses are accepted as valid identity modes. But the European nation would still consider as impermissible any 'fishing expeditions' or allowing the foreign countries to trawl through Swiss bank accounts in hope of finding something of their interest.

The changes were made by the Swiss government's finance ministry today through a revision of 'Requirements for Administrative Assistance in Tax Matters,' an official said from Bern, Switzerland.

The Indian government is facing intense pressure from Opposition, as also courts, to act tough against those who have amassed illicit wealth in foreign countries that have strict secrecy rules. The Swiss Parliament is debating a treaty between India and Switzerland to pave the way for authorities here to seek details of illicit wealth stashed away by Indians in Swiss banks.

As per the existing practice, the foreign country having an information exchange-facilitating treaty with Switzerland can get help from the Swiss government after providing name and address of the suspected tax offender, as also those of the concerned bank.

As per the revision, "other means of identification should also be admissible in the future". While Switzerland has not clarified what all 'other means' of identification modes would be admissible for seeking information on suspected tax offenders, the Swiss Federal Department of Finance said that "identification via a bank account is also a possibility."

"... although care should be taken in these cases to ensure that a fishing expedition is not involved," the ministry said. "Fishing expeditions continue to be impermissible," it added.

To bring this revision into effect, the administrative assistance provisions in double taxation agreements (DTAs) between Swiss and other governments would need to be revised. In the DTA negotiations up to now, including the one with India, the name and address of not only the person but also the bank is needed in administrative assistance requests.

Besides, the ongoing parliamentary debate in Switzerland on 10 treaties, including the one with India, it has been said that "administrative assistance be permitted only if the name and address of the person and the information holder concerned are indicated in the request."

Therefore, the fresh revision would also need to be submitted to Parliament, the Swiss finance ministry said, while adding that it would be done at the "first opportunity".
Earlier, the Swiss banks have said that any information exchange would be as per the conditions set out by OECD, the grouping of mostly developed nations.

These conditions have been laid out by the Organisation for Economic Cooperation and Development (OECD) in its Model Tax Convention that governs the tax information exchange agreements between the signatory countries. The OECD conditions require the foreign authorities seeking specific Swiss bank account details to furnish the identity of suspected offenders, details of the alleged offence along with facts to undermine the suspicion,  name of the concerned bank and branch in Switzerland and a written request from the foreign country's tax agency.

Besides eliminating any obstacles to the effective exchange of information in tax matters, the revision has also been conducted to reduce the risk of failure in the peer review process -- an international mechanism for comparing implementation of global standards on information exchange and tax matters.

In the first phase of peer review of Switzerland by the Global Forum on Transparency and Exchange of Information for Tax Purposes, it was found that Switzerland's requirements for administrative were too restrictive and could prove to be a possible hindrance to an effective exchange of information. Despite ther revision, "identifying the taxpayer and the holder of the information (bank) is an indispensable prerequisite for the granting of administrative assistance."