Push for Global System Against Tax Evasion
India’s desire to have a global system, which will ensure tax-evaders will have no sanctuary anywhere, received a shot in the arm when finance ministers of G-20 nations took a concrete step in this regard. At their meeting in Australia on Sunday, they endorsed a plan to exchange tax information on reciprocal basis by the year 2018. The new global standard, as formulated by the Paris-based Organisation for Economic Cooperation and Development (OECD) in July, would be common for all nations. It would facilitate a “systematic and periodic transmission of bulk taxpayer information by the source country of income to the country of residence of the taxpayer concerning various categories of income or asset information”.
At present, countries exchange such information only on specific requests and based on criminal complaints. India has been in the forefront of demanding establishment of a regime that would make it impossible to evade tax in one country and take shelter in another. One of the first decisions of the Modi government was to set up a special investigation team to unearth black money stashed away by Indians in foreign banks. Evasion of tax in India and taking money outside constitute a serious crime and any nation helping such tax evaders is complicit in the crime. A large sum of Indian money, which should have been used for development, is lying in foreign banks.
India’s efforts to get back money stashed away abroad have not yielded the desired results because of stiff opposition from Switzerland, which does not consider the kind of tax evasion in India as a crime. However, a country like the US has succeeded in ferreting out information from Swiss banks about Americans who have illegal bank accounts there. India must also use its clout to get such information till the global system whereby all countries are mandated to share tax information comes into force. A redeeming feature is that more and more countries, including Mauritius and Switzerland, are coming forward to endorse the OECD system.
