After prolonged discussions, the US and Swiss authorities came to an agreement earlier this month whereby UBS would disclose details of certain US account holders who are suspected of evading US taxes. The Time Magazine outlines the terms:
Under the terms of the new agreement, the IRS will submit a request to Swiss tax authorities to divulge within one year the names of clients suspected of stashing money in UBS to evade U.S. taxes. Account holders will be notified before their names are disclosed and will be able to appeal the decision in Switzerland’s Federal Administrative Court. This approach, the Swiss government says, is in line with the existing law allowing the exchange of account information in cases of suspected criminal activity and also complies with the newly signed double-taxation treaty between the two countries, which stipulates that Switzerland will cooperate with the U.S. in investigating suspected cases of tax evasion.
However, as far as similar requests by the Indian government are concerned, the outcome has not been promising. The Swiss authorities are reported to have declined India’s request on accounts of its broad nature. Professor Vaidyanathan of IIM Bangalore has some interesting thoughts and suggestions on India’s approach, including a comparison with the US strategy.