Share past banking info: India to tax havens

New Delhi: The world community should pressurise tax heavens to share past banking information, as information shared from a prospective date won't serve the desired purpose, Finance Minister Pranab Mukherjee said on Monday.

"While the countries have accepted to end bank secrecy in general, some countries have agreed to do so only from a prospective date and are not willing to exchange past banking information," Mukherjee said at a seminar jointly organised by the finance ministry and the Organisation for Economic Cooperation and Development (OECD) in New Delhi.

"This puts a question mark on the efficacy of present legal provisions for exchange of banking information. There is an urgent need to revisit the existing legal framework developed by OECD in this regard," he said.

The so-called tax heavens are the countries that offer individuals and businesses little or no tax liabilities.

Terming the secrecy in the banking and taxation system a threat to the global economy, Mukherjee said tax havens and low tax jurisdictions were among major reasons behind the recent global financial crisis.

"The opaque system in these jurisdictions and restrictions on exchange of information in these tax havens and their non-compliant behaviour is a matter of serious concern. The concerns are not only on account of protecting the revenue base but also linked to financing of activities which are detrimental to national security interest," he added.

Leaders of G20 in their meeting in London in April 2009 asked the tax havens to end the era of banking secrecy, warning that tough action would be taken against the non-cooperative jurisdictions.

The G20 countries have also agreed to impose sanctions on the non-cooperative countries in a bid to protect the global financial system.

However, the finance minister said G20's call to end the era of banking secrecy had not been implemented in letter and spirit even two years down the line.

"The spirit of this statement has not been respected. We cannot say with certainty that the bank secrecy is over in all cases," Mukherjee said.