India concerned over nations not sharing past banking data

New Delhi (PTI) Concerned over the decision of
certain nations not to share their past banking information,
India on Monday asked the OECD to revisit its legal framework
to effectively put an end to the era of banking secrecy.
Finance Minister Pranab Mukherjee also made a case for
stepping up multilateral cooperation to deal with "abusive"
transfer pricing mechanism that is robbing developing nations
of their scarce natural resources.
He said this at a two-day seminar on international
taxation, jointly organised by his ministry and the
Organisation for Economic Cooperation and Development (OECD),
a 34-member grouping of developed and developing countries.
"While the countries have accepted to end bank secrecy in
general, some countries have agreed to do so only from a
prospective date and are not willing to exchange past banking
information," Mukherjee said, regretting that banking system
was still opaque in various non-tax and low tax jurisdictions.
The Minister, however, did not name the nations, which
are reluctant to share past banking information.
"This puts a question mark on the efficacy of present
legal provisions for exchange of banking information. There is
an urgent need to revisit existing legal framework developed
by the OECD in this regard", the Minister said.
Referring to the issue, OECD Secretary General Angel
Gurria said that although substantial progress have been made
in last 18 months and over 600 agreements have been signed,
"there are some issues which are difficult like the question
of retro activity".
This, Gurria admitted, "is a real impediment in many
Recalling the efforts made at the global level and
statements issued by the G-20 leaders at their London summit
in April 2009, Mukherjee said, "We cannot say with certainty
that the bank secrecy is over in all cases".
As regards the issues concerning transfer pricing, the
minister said, "This abusive behaviour is robbing developing
countries of their scarce resources, which is required for
financing development programmes."
The rising number of disputes in international tax
matters is an area of concern, Mukherjee said, adding that due
to linkages with the global economy, the tax disputes were not
just bilateral in nature, but had assumed a multilateral
character involving multiple countries.
The minister said, "These challenges of the new global
environment will have to be addressed through bilateral and
multilateral cooperation."
India has initiated the process of re-negotiation of tax
pacts with 65 countries to broaden the scope of provisions
governing the exchange of banking information and information
without domestic interest.
So far, India has finalised 14 Tax Exchange Information
Agreements (TIEA) and concluded talks on Double Taxation
Avoidance Agreements (DTAAs) with 36 countries in 2010-11.
He indicated that the international community may also
have to think of a multilateral tax convention to address the
issue, as experience clearly shows that non-resolution of
disputes leads to unending litigation.




cases."