New Indo-Swiss pact will help unearth black money

India and Switzerland have signed a MoU on Financial Dialogue that will pave the way for greater cooperation between the two countries' tax authorities, a move that will allow unearthing black money stashed in Swiss banks.

The agreement signed by Indian Ambassador to Switzerland Chitra Narayanan and Swiss Department of Finance Secretary Michael Ambuhl comes close on the heels of the signing of an amending protocol to the Double Taxation Avoidance Agreement.

The MoU was signed on Monday in the presence of President Pratibha Patil, who is on a state visit, and her Swiss counterpart Micheline Calmi-Rey.

The MoU deals with creation of a useful forum for exchange of views on financial and macro-economic issues. Official sources said the MoU will facilitate dialogue between the tax authorities of the two countries.

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"We noted that the amending protocol to the Double Taxation Avoidance Agreement would provide a framework for exchange of tax related information of importance to either side, when it enters into force," Patil said in a statement.

India is taking several measures to detect illegal funds stashed in various tax haven nations and foreign shores.

A number of tax exchange information treaties are being signed and revised by the country.

Meanwhile, the Swiss government said in a statement that the financial dialogue under the MoU will allow the Swiss and Indian authorities to establish regular and privileged contacts in the financial sector "to identify common interests and to work together to achieve them".

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The Swiss statement said: "With the signature of the memorandum of understanding, the Federal Department of Finance and India's Ministry of Finance have laid the foundations for fostering financial dialogue between the two countries".

It said the objective of the financial dialogue is to strengthen and intensify cooperation between Switzerland and India in the financial sector.

"The financial dialogue will allow the partner countries to coordinate their positions and work together within organisations and international forums to develop their cooperation in terms of policies and financial market regulation and to strengthen their diagnostic capabilities regarding international macroeconomic developments," it said.

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The statement added that Switzerland's financial centre is characterised by its openness and its internationalism.

"Fostering financial dialogue with important emerging economies will contribute to implementing the strategy of the Federal Council in terms of financial market policy," it said.

Patil said during Calmy-Rey's visit to India in 2007, the two sides had agreed to discuss the elevation of the bilateral relationship to the level of a Privileged Partnership.

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"We discussed some of the steps we could take to achieve this goal. In our view, this would require an enhancement of the frequency, as well as the quality of our interaction in areas such as economic and commercial cooperation, scientific ties, educational exchanges and people-to-people contacts," she said.

She said that during the discussion, the two sides touched on economic, financial and fiscal cooperation between India and Switzerland.

Patil said the discussions also included the "important issue" of the reform of the United Nations, including the expansion of the Security Council.