Belgium agrees to share black money info with India

The government is a step closer to tracing the secret bank accounts of Indians, especially diamond traders, in Belgium.

Under pressure from India and various global forums, Belgium has finally agreed to provide information held by its banks and financial institutions to India.

The move is likely to help the government track black money parked by Indians in Belgium - a huge diamond trading hub.

Click on NEXT for more...

In a letter to Indian authorities, Belgium has confirmed that with effect from July 1, 2011, it would exchange banking information if India was also willing to do the same.

Belgium has already amended its domestic law to facilitate sharing of information.

"Due to a proactive approach taken by India and pressure built through multilateral forums, Belgium has agreed to share information held by its banks and financial institutions.

This will help deal with the menace of black money as Belgium is a centre for diamond traders and its capital Brussels hosts the headquarters of the European Union," a finance ministry official told Business Standard.

Click on NEXT for more...

Antwerp in Belgium is the centre of the global diamond business and many families from Gujarat are involved in diamond trading there.

Earlier this year, the government had served notices on 17 Indians for allegedly stashing away money in secret bank accounts in the LGT Bank of Liechtenstein.

Some of the biggest diamond traders from Gujarat reportedly comprised the list.

The Double Taxation Avoidance Agreement (DTAA) between India and Belgium, signed in 1993, provided for exchange of information if it was held by banks or financial institutions.

Click on NEXT for more...

In its commentary on the OECD Model Convention, Belgium's stand till 2008 was it reserved the right not to include paragraphs on exchange of information held by banks.

Although this reservation was removed in 2010, Belgium continued to hold it would not share such information under its old treaties.

In April 2011, the Peer Review Group of the Global Forum on Transparency and Exchange of Information for Tax Purposes, of which India is a vice-chair, said some of the provisions of the OECD Model were not present in Belgium's treaties and recommended the country take measures to bring all its tax treaties to international standards.

Click on NEXT for more...

Belgium is a member of global forum OECD.

Accordingly, Belgium amended its Income Tax Code to provide for exchange of information. Since India, as per domestic laws, is able to provide banking information to other countries, it was confirmed to Belgium that information held by Indian banks would be provided under the existing provisions of the DTAA.

Belgium then requested the Peer Review Group for the upgrade of its initial findings about some elements missing in the country's tax treaties.

The group changed its recommendations but suggested Belgium continue to make changes in the article related to exchange of information.