As India and 41 countries today adopted a new global standard for automatic exchange of information on offshore tax evasion, Swiss banks said this framework is very complex and involves high costs.
The reaction from Swiss banks, through their apex body SBA (Swiss Bankers Association), followed a "single global standard for automatic information exchange" developed by Paris-based OECD (Organisation of Economic Cooperation and Development) after consultation with G-20 countries.
Welcoming this framework to fight offshore tax evasion, as many as 42 jurisdictions including India issued a joint statement, saying that such a global collaboration was necessary to "clamp down on this harmful and abusive activity which reduces public revenues and increases the burden on those who pay their taxes".
The issue of alleged tax evasion by Indians through banks and other entities in offshore locations, specially Switzerland, has been matter of a political debate in India.
It has been alleged that Swiss banks have been used in a big way for years to stash black money by Indians and the matter is also expected to be a key issue in upcoming elections in India.
Reacting to this latest move by OECD, which is mandated with setting global standards for framing policy to address tax evasion and related issues, SBA said in statement issued from Basel that it has been in favour of a global standard for automatic exchange of information for over a year and has also contributed constructively to the drafting process.
Terming the OECD recommendations a "general a step in the right direction", SBA however said that an important positive point was confidentiality of the exchanged data, that is, adherence to strict data protection rules by the responsible authorities abroad.
The grouping of Swiss banks said that "what has still not been satisfactorily addressed is the question of a level playing field.
"Firstly, the basis to be used for client identification is domestic money laundering regulations. There are still different standards in this area. As a result thereof, countries with less strict regulations will be able to exchange less information than countries such as Switzerland.
Hitting out at the US, it further said that "it is becoming apparent that the US will not be prepared to offer full reciprocity" and said that there were chances that some provisions introduced in the US could be misused as a loophole for clients of US banks.
The SBA further said that the implementation of the new OECD standard is highly complex and will result in significant costs.
