The government on Saturday denied reports that Indians were allegedly holding black money in Switzerland and said it has reached out to Swiss authorities to verify information about deposits.
Citing annual data from Switzerland’s central bank, the report said deposits of Indian individuals and firms, including India-based branches and other financial institutions in Swiss banks, grew 286 per cent to over Rs 20,700 crore in 2020 from Rs 6,625 crore at the end of 2019, on a sharp jump in holdings through securities and similar instruments, even as client deposits fell. They said the jump in total Indian funds in Swiss banks reverses the two-year downward trend and has reached a 13-year high.
The Union Finance Ministry said in a statement that India and Switzerland have signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC). “Both countries have also signed the Multilateral Competent Authorization Agreement (MCAA), according to which, Automatic Exchange of Information (AEOI) is activated between the two countries for sharing of annual financial account information for the calendar year 2018 onwards.,” it added.
The Finance Ministry said that India and Switzerland exchanged financial information of their residents in 2019 as well as in 2020. “In view of the existing legal arrangement for exchange of financial account information (which has a significant deterrent effect on tax evasion through undeclared assets abroad), there is no possibility of increasing deposits on account of the undeclared income of Indian residents in Swiss banks. Doesn’t seem like much potential,” it added.
The ministry also said that five factors could potentially explain the increase in deposits in Switzerland, including:
1. Increase in deposits by Indian companies in Switzerland due to increase in business transactions
2. Increase in deposits due to business of Swiss bank branches located in India
3. Increase in Interbank transactions between Swiss and Indian Banks
4. A capital increase for a subsidiary of a Swiss Company in India
5. Increase in liabilities associated with outstanding derivative financial instruments
“The Swiss authorities are requested to provide relevant facts along with their views on possible reasons for the increase/decrease in the light of the above media reports,” the ministry said.