Tax havens hit exchequer, harm national security: India

Expressing concerns over tax havens, the government today said financial manipulations in these areas hit tax collections and can also be detrimental to security interests.
   
"The opaque system of exchange of information in the these tax havens and their non-compliant behaviour are matter of concern not only for revenue base but also linked to financing of activities which are detrimental to the national security
interests," finance minister Pranab Mukherjee said at a CBDT seminar on transfer pricing here.
     
The finance minister's comments came in even as India is in the process of revisiting its tax treaties with a number of countries, including tax havens like Switzerland.

A tax haven is a country which has secrecy of laws on taxes and very low or zero tax rates.
    
For a developing country like India, Mukherjee said the role of tax havens and low tax jurisdictions have become an area of great concern.

He also blamed these areas for augmenting the global financial meltdown.
    
"It is widely believed that the tax havens and low tax jurisdictions were important actors in the crisis," he said.

He said agreements on transparency in tax matters were resisted in the past on the pretext of secrecy.

Mukherjee said there seems to be consensus at the world level that the tax havens need to adhere to the established norms floated by the Global Forum, which was set up by G-20, a group of 20 developing and developed nations, for bringing transparency in exchange of information among countries on tax fronts.

"The global pressure seems to be working and many tax havens and low tax jurisdictions have already signed and many have proposed to sign exchange of information agreements for transparency in cross-border agreements," he said.
   
The finance minister added that it is in countries mutual interest to maintain a healthy global fiscal system which is
self sustainable and all important actors including the tax havens comply with established norms of transparency and fiscal discipline.