India has signed a tax information exchange agreement with the island of Jersey, the seventh such agreement to be struck by India as part of its efforts to clamp down on tax evasion. But some experts warned the agreement would do little to increase the flow of information.

Mr John Christensen, the Jersey-born director of the international campaign group Tax Justice Network, described the agreement as a “needle in a haystack approach” and “unfit for purpose”.

The Jersey agreement requires India to provide minimum details about the information it wants for it to be considered, and must be “foreseeably relevant” to the administration and enforcement of domestic laws, according to a statement from the Indian High Commission in London.

“The down side is that you have to have enough information to persuade the courts in Jersey that you need access to that information,” he said.

The automatic exchange of information when a person of one country opens an account in another – as is the case within Europe under the savings tax directive – would be the only effective solution, he said.

He noted the Prime Minister, Dr Manmohan Singh's comments at the G20 meeting in Cannes, describing his call for a move to automatic exchange as an “incredibly important development”.

“G20 countries should take the lead in agreeing to automatic exchange of tax-related information with each other, irrespective of artificial distinctions such as past or present, for tax evasion or tax fraud,” Dr Singh told the G20 on Thursday.

“He is the first significant politician globally to come forward to the G20 and step up our game here,” said Mr Christensen.

India has signed information exchange agreements with Liberia, the Bahamas, Bermuda, Virgin Islands, Isle of Man, and the Cayman Island, and concluded negotiations with a total of 16.

Last year India identified 22 jurisdictions with which it hoped to reach information exchange agreements.

It has also been renegotiating existing Double Taxation Agreements with a number of countries, including most recently with Switzerland. Switzerland ranks No 1 on the Tax Justice Network's Financial Secrecy Index, with Jersey ranked 6th.

Source: India Brand Equity Foundation
Date: November 07, 2011