In an attempt to dispel its image as a tax haven,Switzerland has asked its banks to extend their due diligence so as to prevent the acceptance of untaxed assets more effectively,a move that is of significance to India as well.
The notification by the Swiss federal department of finance also states that before accepting assets,all banks will have to ensure that their foreign clients make a declaration on the fulfilment of their tax obligations.
At a first level,past tax problems should be settled,in particular cases of clients living abroad whose assets have not been correctly taxed. This occurs by regularising the assets from existing client relationships from a tax viewpoint,thereby lowering the legal risks for banks, the federal department said.
India has been witnessing huge uproar on the issue of black money parked in foreign countries both from the Opposition and the civil society. In fact,the Supreme Court also pulled up the government last year on its inaction in bringing back the black money.
The Swiss department said that while safeguarding the privacy of foreign clients,the international withholding tax agreements will be used for taxing taxpayers in accordance with the regulations of their country of domicile.
There is international interest in this approach and it will be pursued by the Federal Council beyond the agreements already negotiated with Germany and the United Kingdom, the statement said.
The proposals come on the back of global crackdown on tax evasion by cash-strapped governments recently.
The proposed steps include a greater international cooperation and taxation of investment income and capital gains for Swiss bank clients in the future.
While proposing steps to comply with the various double taxation agreements,the Council also said that serious tax crimes should be taken into account in the fight against money laundering in the future.