India to Amend Tax Agreement with Switzerland

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Oct. 19 – India will soon amend its taxation treaty with Switzerland in December allowing for the exchange of information on all tax matters including tax evasion.

“We will amend the Double Taxation treaty to include tax evasion to prevent misuse,” Phillippe Welti, the Swiss ambassador to India was quoted by The Economic Times. The new agreement will follow the rules detailed under Article 26 of the OECD’s Model Tax Convention.“It was agreed that we should follow the model code of the OECD (Organisation for Economic Co-operation and Development) in respect of taxations and exchange of information part. We have agreed to initiate for the amendment of the relevant clause on taxes where the exchange of information can take place,” said Union Finance minister Pranab Mukherjee.

Switzerland is unique for its long history of bank secrecy that protects a client’s assets and information although this practice has been criticized for allowing abuses like tax evasion.

The country’s policy of bank secrecy has slowly been changing following the 9/11 attacks and last year’s global economic crisis.  In August, Swiss bank UBS agreed to give the United State’s Internal Revenue Service bank details of 4,450 clients suspected of evading taxes.