Chidambaram said India was “seriously concerned” that some Indian taxpayers may have parked substantial unaccounted income and assets in offshore jurisdictions, and “it expects cooperation from those jurisdictions to deal with them effectively.”
“In the event of continued denial of access to vital information, which Switzerland is obliged to provide under the DTAC, India may be constrained to actively consider the options available under our domestic laws,” Chidambaram said.
Though he did not spell out the options, these may include making unavailable to investors from Switzerland the benefits under the double-taxation avoidance agreement between the two countries.
“In view of your assurance that the Swiss government is keen to cooperate with India and find possible ways of complying with our requests for information under DTAC, a bilateral discussion at the official level was held in New Delhi on February 4 and 5, 2014.
“However, no progress was made during the discussions and the Swiss delegation merely reiterated their previously stated positions and refused to consider any options or alternate approaches,” Chidambaram said in the letter to the Swiss Finance Minister.
He said Swiss authorities through a letter dated February 20, 2014 suggested that they are “closing” the requests made by India in 562 cases.
“You would appreciate that, such a situation, where there is no effective exchange of information between India and Switzerland despite a clear legal obligation of Switzerland under Article 26 of the DTAC, is a matter of grave concern for India,” he said.
Chidambaram said the Swiss government had proposed revision of its domestic laws for providing information under the tax treaties, which would have enabled the European nation to provide information to India in the HSBC cases even in respect of the so-called stolen data.
In 2011, the Indian government received the names of 782 Indians who had accounts with HSBC.
“However, it is learnt that the proposed revision did not take place due to strong political opposition in Switzerland,” he said. “It should be noted that Switzerland's refusal to provide information in serious cases of tax evasion in India is a sensitive matter in India too.”
He hoped that the Swiss government would be able to persuade its Parliament to agree to the proposed changes in its domestic law to comply with internationally accepted standards and conventions.
“Switzerland cannot violate its obligations under the DTAC with India on any ground, including on moralistic grounds, when the Government of India has all along acted in good faith and has requested the information in a bonafide manner,” Chidambaram added.
