Jakarta/New Delhi: In a big boost in the fight against blackmoney, four overseas jurisdictions including Liechtenstein-- where Indians are suspected to have stashed illicit funds-- Thursday agreed to do away with banking secrecy ways by allowing automatic tax information exchange.
Besides Liechtenstein, Isle of Man, British Virgin Islands and Cayman Islands -- jurisdictions that have come under the scanner of tax investigators -- have joined the global convention formulated by the Paris-based advisory group OECD.
"Liechtenstein and San Marino became the 62nd and 63rd signatories of the multilateral convention on mutual administrative assistance in tax matters.
"... Another important development is the deposit by the United Kingdom of declarations extending the territorial scope of the Convention to cover the following jurisdictions: Isle of Man (Crown Dependency) and Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Montserrat, and Turks & Caicos (Overseas Territories)," OECD said in a statement.
The announcement came on the first day of the Organisation for Economic Cooperation and Development's (OECD) two-day meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes in Jakarta.
A senior Finance Ministry official in New Delhi said the latest development is a "boost to India's efforts to combat blackmoney instances overseas."
"These four jurisdictions are of special importance with respect to India as a number of investigations are focused on investments and transactions involving their economic channels.
"With the latest move, the exchange of information in tax evasion cases, involving overseas jurisdictions, would become faster and smoother," the official said.
In recent months, India has received much fillip in its crackdown on unaccounted money especially with Switzerland joining the same OECD multilateral convention last month.
Indian probe agencies have come across a number of cases where individuals or entities from India have been detected using banking channels of Liechtenstein and the three other jurisdictions to hide their illegal incomes or stash funds.
The OECD multilateral convention provides for all forms of mutual assistance like exchange on request, spontaneous exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection while protecting taxpayers' rights.
It also provides the option to undertake automatic exchange, requiring an agreement between the parties interested in adopting this form of assistance.
At present, there are more than 60 signatories to the convention. These include Argentina, Australia, Austria, Belgium, Canada, China, Denmark, France, Germany, Greece, Hungary, Indonesia, Italy, Japan, Korea, the Netherlands, New Zealand, Poland, Russian Federation, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, the UK and the US.
The convention, the OECD said, also "ensures compliance with national tax laws and respects the rights of taxpayers by protecting the confidentiality of the information exchanged."
First Published: Thursday, November 21, 2013, 22:00