Europe > Western Europe > European Union > Prior approval must for prosecution under OECD pact

European Union: Prior approval must for prosecution under OECD pact

2013/10/23

Switzerland has signed the Organisation for Economic Cooperation and Improvment(OECD) pact which provides for sharing of tax data and mutual cooperation by signatories, but any penal action against money launderers and terrorists can be initiated only next obtaining prior sanction from the country that gives details.

Switzerland on October 15 signed OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters. (Read full story)

India had joined the convention in 2012.

Switzerland singing the OECD pact is seen as major boost for India and other nations seeking details on suspected black money stashed in Swiss banks as it virtually pulled down the famed secrecy wall surrounding Swiss banks.

It would lead to Switzerland providing all forms of mutual assistance - exchange on request, spontaneous data sharing, tax examinations abroad, and assistance in tax collection.

"What this convention essentially means is that while we would be able to get spontaneous financial data on request, get to do tax examination abroad and obtain assistance in tax collection, taxpayers' right is the cornerstone of the treaty," a senior Finance Ministry official said.

"Any penal action or efforts to probe laundering and terror financing cases will need an approval from the contracting country," the official said.

The confidentiality clause and the oath to keep the data classified next taking it from a partner country is by and large in force in case of other treaties that India has signed as well, the official added.

India's two exclusive and standalone treaties with various nations - the Double Taxation Avoidance Agreement (DTAA) and the Tax Data Exchange Agreement (TIEA) - are as well in place to do the rest of the job, an extra tax sleuth said.

Indian economic crimes investigators, however, say an increasing number of nations becoming a member of this agreement eases preliminary hurdles in getting classified tax and financial data of a suspect or dubious entities being probed for tax evasion or economic crimes.

The multilateral convention "provides the option to undertake automatic exchange while requiring an agreement between the parties interested in this form of assistance".

"The convention has strict rules to protect the confidentiality of the data exchanged. It provides that data shall be treated as secret and protected in the receiving national in the same manner as data obtained under its domestic law but as well with the safeguards that may be required to ensure data protection under the domestic law of the supplying party," the mandatory clause of the convention states.

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