New Delhi, Aug 31 (PTI): India and Switzerland on Monday signed a treaty that will enable exchange of information on tax evaders, considered a must for getting details on unaccounted funds stashed away by Indians in Swiss banks.
The treaty is a revised version of the existing Double Taxation Avoidance Agreement between India and Switzerland and was signed by visiting Swiss Foreign Minister Micheline Calmy-Rey and Finance Minister Pranab Mukherjee.
Though the two leaders did not take queries from media persons, the Switzerland government and banks have been insisting that the exchange of information as per OECD norms could only take place after signing a revised treaty.
Black money has become a major political issue in India, with the the government promising to take every possible step to bring back this unaccounted or criminal money. Mukherjee is expected to make a statement on the agreement in Parliament tomorrow.
Later, the Finance Ministry said in a statement, "A protocol amending the existing Double Taxation Avoidance Agreement was signed here today between Republic of India and Swiss Federal Council."
Besides the two dignitaries, Finance Secretary Ashok Chawla, Revenue Secretary Sunil Mitra, Chief Economic Advisor Kaushik Basu and Swiss Ambassador Philippe Welti were also present on the occasion.
The Swiss Federal Department of Finance (FDF) said in a separate statement, "The revised Double Taxation Agreement contains provisions on the exchange of information in accordance with the OECD standard, which were negotiated in line with the parameters decided by the (Swiss) Federal Council."
The issue of Indians having secret Swiss bank accounts is a hot political topic and was a poll plank during last year's general elections. Indians are alleged to have assets worth billions of dollars in banks in Switzerland.
Swiss banks had said that exchange of information would be based on OECD (Organisation for Economic Cooperation and Development) norms. The Paris-based OECD sets international tax standards.
Switzerland is entering into revised tax pacts with many countries in accordance with OECD's Model Tax Convention to facilitate the bilateral exchange of information related to the bank accounts of tax evaders.
Earlier in the day, when asked about the terms of reference in the revised tax treaty with Switzerland, Banashri Bose Harrison, who is the Joint Secretary (Central Europe) at the Ministry of External Affairs, said they were at par with other countries.
"(The revised treaty is) exactly at par... (with) what has been signed (by Switzerland) with other countries," Banashri Bose Harrison said.
The sources said the revised treaty will make it possible for Switzerland to come to an agreement with India on an automatic and extensive most favoured nation clause.
In the case of dividends, interest, royalties and payments for technical services, the clause makes provision for the lowest withholding tax rate -- which India has with another OECD nation -- automatically applying to Switzerland.
The revised treaty would also ensure that in the future, shipping companies operating internationally would have to pay tax on their profits only in their country of domicile.
Currently, India has DTAAs with as many as 79 countries, but none of them has provisions for exchange of information related to taxation.