Bowing to international pressure, Switzerland — a tax haven and a preferred destination for stashing ill-gotten wealth — on Tuesday signed OECD’s (Organisation for Economic Cooperation and Development) Multilateral Convention on Mutual Administrative Assistance in Tax Matters. It means that the country will now have to part with the veil of secrecy that it zealously maintains for the wealth that is stashed in its banks by individuals to evade taxes.
The signing comes after the Swiss Federal Council, the highest policy making authority of the country, approved the Convention on October 9, 2013.
The Paris-based OECD is an international policy-advisory body that has formulated global tax standards to fight evasion and concealing of illicit funds.
As per the Swiss National Bank:
The estimated funds held by Indians in Swiss banks amounted to about Rs 9,000 crore at the end of 2012. It was an estimated Rs 14,000 crore in 2011. The overall funds held in Swiss banks by entities from across the world also fell from $1.65 trillion to $1.5 trillion in 2012.
India has all along wanted the Swiss authorities to part with information about Indian capital parked in Swiss banks, but because of laws there the information was never shared with India or any other country that sought information about ill-gotten wealth.
The development will be a major boost to India and a host of other countries that have been asking for information on wealth that is parked in banks in that country.
The decision will be binding on Switzerland to automatically exchange information and extend mutual administrative assistance in tax matters with overseas authorities.
The Convention, which has now been signed by 58 countries, including India, provides for sharing of information and mutual cooperation among all its signatories. “The signing of the Convention confirms Switzerland’s commitment to the global fight against tax fraud and evasion with a view to safeguarding the integrity and reputation of the country’s financial centre,” said Stefan Fluckiger, Switzerland’s Ambassador to the OECD.
The signatories to the Convention include Canada, China, France, Italy, Japan, Korea, Luxembourg, The Netherlands, New Zealand, Russian Federation, Saudi Arabia, Singapore, South Africa, the UK and the US, among others.