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'Tax information exchange is now global'

March 07, 2011 11:12 IST
Finance Minister Pranab Mukherjee listed India's membership of the Global Forum of Transparency and Exchange of Information for Tax Purposes, an initiative of the Paris-based Organisation for Economic Cooperation and Development, in his Budget speech as the one way to track black money.

OECD Secretary General <B>Angel Gurria</B> was in India recently and met Mukherjee, among others. He tells <I>Indivjal Dhasmana</I> the forum will create peer pressure on non-cooperative jurisdictions. Edited excerpts:

<B>How does OECD plan to facilitate information between countries on tax issues?</B><BR>

We have created a global forum for exchange of tax information. Worldwide, 97 countries are participating. We're now having a peer review process. By the end of this year, we will have peer review of 70 of 97 countries. We have already peer-reviewed India, because it volunteered...(India has come out with) flying colours.

This activity will allow us to identify those jurisdictions where either the legal framework is not good enough or practices are not good enough and, therefore, information is not flowing.

The idea is that there will be no place to hide for black money. On request, information will be provided, without necessary having to prove that it is a criminal case or this is a fruad.

<B>What will be the mechanism to force these non-cooperative countries to cooperate?</B><BR>

Non-cooperating countries will be identified simply because they will be denounced in the forum. And, of course, they will face pressure. Right now, these 97 countries have committed to us that they will adopt OECD standards and they will provide information on request.

If there are practical problems and there are obstacles or somebody tries to be too smart, we will identify them and we will put peer pressure on them.

<B>In India, there is a big controversy on whether the names of tax evaders, tracked through tax treaties, can be revealed or not. The Indian government says names cannot be provided till prosecution because of tax treaties.</B><BR>

That is a different question. Names are provided to the tax enforcers and they will then proceed legally. When they take the thing to court, then names would be divulged. But, the idea is that you do not get a bunch of names for some details about monies. This is not about naming and shaming.

This is about having evidence for court cases. This is also meant to avoid fishing expeditions. The idea is, if actions are brought against a particular tax payer and he is found guilty, then he will have to pay. But the idea is not to expose people, the idea is to make them pay taxes.

<B>In this regard, what is your take on amnesty schemes? India has appointed a group to look into its feasibility.</B><BR>

I am a former minister of finance. In Mexico, every time there is turbulence, there is capital flight. We would say, well, in the next six months you bring back the money, we will not charge you. Next six months, sometimes we got money. But, at the end of the day, what brings back money is growth, business opportunities and reasonable levels of taxes and expectations, that if you try to cheat, you will be caught.

We are better off now in terms of level of cooperation - 600 agreements have been signed in the past 12 to 18 months, against 50 in the 10 years before that.

<B>Had India been a member of OECD, would it have been in a better position in tracking black money?</B><BR>

We do a pretty good job with India. Nothing to do with whether they are a member of OECD or not. The substantive matter is, can we improve delivery of information or not? And, not whether you are a member or not.

Indivjal Dhasmana
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