India must show valid proof for tax fraud probe: Swiss Envoy

MUMBAI: The Swiss government will cooperate with India on the black money issue if Indian authorities provide valid proof of tax evasion, but will not work with evidence obtained through ‘fishing expeditions’, said Switzerland’s Ambassador to India Dr Linus von Castelmur.

“We can only work when there is a true investigation through the Indian tax authorities and Enforcement Directorates and all these different bodies, where they have clear prima facie evidence that there has been tax fraud involved,” he said, pointing out that his country has a double taxation avoidance agreement with India that was signed in 2011.

“It stipulates legal assistance for tax evasion cases. So we are fully aligned with that. But it is stipulated in the agreement that we cannot work with so-called fishing expeditions.”

Castelmur said that the Swiss government understands India’s concern on the black money front and stressed for a clear understanding of the issue.

“One part of the issue is dealing with the past. Switzerland was a destination for several decades where money flew in from different sources and that is not always tax money...Dealing with the past is difficult because you cannot undo what has happened over 40-50 years,” he said.

The Swiss government, he said, will accede to information exchange once the Indian authorities have independent proof and research with independent investigations of each case.

In the future, though, when an Indian, American or German citizen deposits money into Swiss banks, Swiss taxation authorities would inform the respective tax authorities in order to maintain full transparency, he said.

Black money was a key issue raised by the Narendra Modi-led Bharatiya Janata Party during the 2014 election campaign and after assuming power the new government appointed a Special Investigative Team to recover illegal wealth stashed in overseas banks. Finance Minister Arun Jaitley recently referred to a list of 627 overseas account holders received by the government, which was later submitted to the Supreme Court.

On being asked about the status of the proposed Free Trade Agreement (FTA) between Switzerland and India, Castelmur told ET, “When China can focus on a small country like Switzerland and sign the FTA quickly, why should India not be able to do that... We will have two visits next year and let’s hope that it happens soon." The two countries have been negotiating the FTA for the last seven years.