New Delhi/Berne: Flooded with requests for bank account details from India, Switzerland on Monday made it clear that it will not entertain any banking and tax-related requests that are based on information acquired illegally.
This comes in the backdrop of requests from countries, including India, which are in possession of account details of Swiss bank customers that were allegedly stolen or gathered through illegal means and passed on to governments.
While promising deeper financial dialogue with India for exchange of information on suspected tax evasion and other cases, Switzerland said requests would not be considered if they have been made for the purpose of 'fishing expeditions'.
In its annual report on international financial and tax matters for 2013, published today, Swiss finance ministry (the Federal Department of Finance) said requests would also not be entertained "if they are based on information that was obtained through acts punishable under Swiss law, such as the illegal acquisition of data".
With regard to institutionalisation of financial dialogues with India, Switzerland said that "the first round of financial dialogues got under way with India" in 2012 and the aim now is to deepen these dialogues.
"The aim of financial dialogues is to develop and foster close contacts with the relevant authorities of the partner state in question," it said.
Besides exchange of information, these dialogues would also facilitate collaboration in areas of mutual interest, such as financial market policy and regulation, positioning in international financial forums and the improvement of early warning mechanisms.
Switzerland has often been accused of providing a safe haven to illicit wealth of entities from various countries, including India, and its tough banking secrecy laws make it difficult for authorities from abroad to access details of such bank accounts.
India is probing alleged stashing of untaxed funds in certain Swiss banks. The country has not got details of such funds directly from Switzerland and it is said that these details found their way to India after certain account details were stolen electronically by a third party.
Switzerland said the administrative assistance clause in its individual double taxation agreements with various countries contain the substantive legal basis for exchange of information with contracting states.
A new Tax Administrative Assistance Act (TAAA), which came into force on February 1, 2013, provides for administrative assistance under DTAs and other agreements for the exchange of information in tax matters with respect to both foreign and Swiss requests for administrative assistance.
"Administrative assistance is provided exclusively upon request. Group requests are permitted. Requests will not be considered if, for example, they have been made for the purposes of fishing expeditions (requests without concrete indications)...," Swiss Department of Finance said.
It further said that a decision has also been taken on how the revised international recommendations on combating money laundering and terrorist financing can be implemented.
"Serious tax crimes are now to be punishable also under the heading of money laundering. In the event that they suspect serious tax crimes, financial service providers must report these cases to the Money Laundering Reporting Office Switzerland.
"In the area of taxation, Switzerland wants to further strengthen withholding tax agreements with foreign countries as a credible alternative to the automatic exchange of information.
"Withholding tax agreements, administrative and mutual assistance in accordance with the international standard and additional due diligence requirements represent effective and forward looking means of combating abuses in the area of taxation.
"At the same time, they can help to ensure that the legitimate need for protection of clients' privacy is preserved," Switzerland said.
First Published: Monday, February 25, 2013, 19:59