By Gyanendra Kumar Keshri, IANS,
New Delhi : Global bodies are putting “enormous pressure” on tax havens like Switzerland and Luxembourg, including threat of sanctions, to change opaque laws and share information that will help countries like India trace huge sums of black money stashed abroad, said a senior OECD official.
“There is a sea change. Political tolerance towards tax havens is coming to zero level. G20 and OECD are putting enormous pressure on them to change,” said Jeffrey Owens, director of the OECD Centre for Tax Policy and Administration.
He said the Organisation for Economic Cooperation and Development (OECD) was working closely with G20, the group of 20 most powerful nations, to force tax havens to be transparent and cooperate with other countries to help curb tax evasion and money laundering.
“You have to be transparent. You have to give access to information and you have to have legal instruments in place to exchange the information. We have to do this in a way that we achieve a level playing field,” Owens told IANS in an interview here.
The issue of black money and tax havens have attracted a lot of public and media attention in India.
“It is a big issue in India. At the same time, it is a global issue. People are uniting against it.” Owens said.
He said the OECD had adopted a set of criteria for blacklisting tax havens if they refuse to cooperate.
“We are making sure that all countries, including OECD member countries like Switzerland, Luxembourg and Austria, implement the decisions. Otherwise they will face sanctions,” said Owens.
The Paris-based OECD, a grouping of 34 countries, accounts for nearly 80 percent of world trade. Although India is not a member, it has close relations with OECD and has joined its multilateral platform initiative to check tax evasion and money laundering.
India has also urged countries like Switzerland and Luxembourg to share banking information of Indian citizens and people of Indian origin to help trace billions of dollars of black money.
According to unofficial estimates, the quantum of Indian black money ranges from $450 billion to $1,400 billion.
Owens said that at the G20 Cannes summit in November 2011, OECD would recommend tough action against tax havens.
He hoped that these countries would transform themselves and cease to be a shelter for people looking to evade taxes, launder money and engage in illicit economic activities.
“They are going to cease to be tax havens. Sure, they will exist but they can’t operate the way they have been in the past. Some are sophisticated countries and might transform themselves as off-shore financial centres.”
These countries or territories have laws to attract foreign capital and offer individuals and businesses little or no tax liabilities.
Owens said a series of tax information exchange agreements signed between countries would enable them to get information on tax evaders.
“In the last two years, over 600 tax information exchange agreements have been signed. India has signed 14 agreements. This will enhance cooperation among countries,” he said.
The OECD official said tax evasion and money laundering had resulted in the loss of over $100 billion to government exchequers worldwide, and were among the major reasons behind the global financial crisis.
“Whether it’s tax evasion, money laundering, bribery, bad governance, all these thrive in a climate of secrecy, weak regulation and weak cooperation. We must fight each of these.
“If you make progress in counter-acting tax evasion, you also make progress in counter-acting money laundering,” he added.
(Gyanendra Kumar Keshri can be reached at [email protected])