By Iftikhar Gilani
THE ACTING head of the Principality of Liechtenstein, Prince Alois, has announced that an Indian request on sharing of information on stash money will be considered only after the double taxation avoidance treaty and other tax-related deals have been concluded.
After a recent meeting with Finance Minister Pranab Mukherjee, Prince Alois said the agreements were still at an exploratory stage, thereby hinting that it would be a long time before India recovers the mounds of black money — unofficially pegged at around $1.4 trillion. Roughly, this is more than a year’s GDP of India — the bulk of it reportedly secreted away in undisclosed bank accounts in Switzerland, Liechtenstein and other island nations.
Dispelling the notion that his country, with a population of just around 36,000, was a tax haven, the prince, accompanied by Foreign Minister Aurelia Frick, showed keenness on having a Free Trade Agreement (FTA) to give a boost to bilateral trade. It is around $5 million.
Prince Alois’s is the first ever official business delegation from Liechtenstein. He said his country would happily cooperate on issues like terrorism, money laundering and corruption — but that providing information on tax evasion at this stage was not on the agenda. Indeed, even after the agreements are concluded, it is doubtful whether India will get a complete list of the tax evaders.
“We would like a double taxation agreement, rather than a treaty just for a tax information exchange. We are, after all, more than just a little island offering offshore financial services. So we think a double taxation treaty would help trade, besides complementing the FTA, thus enhancing business on both sides by reducing yet another trade barrier,” the prince said.
Even if the trade deals are struck, it is doubtful whether India will get the list of tax evaders
It is Germany that provided India the list of 18 Indians who have parked untaxed money in LGT Bank. It did this based on information emerging from a DVD, allegedly stolen from a Liechtenstein bank in 2008 — helped by the Double Taxation Avoidance Agreement (DTAA). Following an uproar in Parliament, the government said it was planning to speed up the process of entering into such agreements with other countries as well. But the prince said the issue never cropped up during his meeting with Mukherjee. He also claimed that while they discussed the taxation agreement, and other issues, there was neither a demand from India on sharing of information on bank accounts, nor was the subject ever raised. Liechtenstein has a thriving economy — with 40 percent of its total GDP of $5.5 billion coming from the manufacturing sector. It also has a low tax regime.
India does have information exchange agreements under DTAAs with 79 countries — but not all of them carry information exchange clauses.
All in all, it’s a major challenge that will take more than just brave words to meet.