India sent back by Swiss Banks

Currently, we read a lot of news regarding Swiss Bank's refusal to share confidential account details with India even though, USA has reached an agreement with Switzerland, under which Swiss Bank UBS AG agreed to hand over details of  more than 4,000 secret accounts worth 18 billion dollars. Many are trying to project this as a power issue, wherein USA being a super power can get what it wants while India cannot. But this may not necessarily be true. There is another point of view on the issue.

US went to Swiss Bank with a list after it spent years in investigating the suspects and collected sufficient proof against the tax evaders. The US revenue service filed a case against UBS AG in an American court and UBS gave way because the case that US built was very strong. In contrast, India went to Swiss banks with a list of people and asked details about them without doing their homework properly. The Indian authority didn't have a strong case against the people whose information they were seeking to acquire. The Swiss law does not permit such fishing expedition.

Indian and Switzerland have signed a double taxation treaty under which the Swiss Banks will have to share information with India, if India can prove that the suspects are tax offenders. The US also achieved its purpose using the same agreement. The Swiss Banks Association has asked India to submit solid proof about the suspects being tax offenders.

About Swiss Bank (source: Wiki)

The secrecy tradition of the Swiss Bank is more than 300 years old. The Swiss government views the right to privacy as a fundamental principle that should be protected by all democratic countries. Bank secrecy (or bank privacy) is a legal principle under which banks are allowed to protect personal information about their customers, through the use of numbered bank accounts or otherwise. Effective bank secrecy is better achieved in certain countries, such as Switzerland or in tax havens, where offshore banks adhere to voluntary or statutory levels of privacy. Swiss law distinguishes between tax evasion (tax -reporting of income) and tax fraud (active deception). International legal assistance is only granted with respect to tax fraud.