Answer to TOI Article SC order may impact other tax treaties
Answer to TOI Article SC order may impact other tax treaties
Read the article published in the TOI headline says that
SC order may impact other tax treaties
But the article is misleading to readers and gives half information only
The Supreme Court order will not impact anyone, no government in this universe will object to the directions of the Supreme Court of India except Corrupt governments around the world
Now step by step understand the TOI Article
Para I TOI –
The Supreme Court's directive on sharing the names of overseas account holders has raised worries about India's commitment to the confidentiality clause in various tax treaties and may impact remittances from the US.
Answer Reality views –
It says about various tax treaties does not mention name of any treaty as per my knowledge there is no treaty which stops revealing the names of people in the courts.
Para II TOI –
Any move to make the names public without prosecution may hamper signing of the Foreign Account Tax Compliance Act (FATCA) with the US, which contains a confidentiality clause. In the absence of the inter-governmental agreement related to FATCA, all remittances, including payments for exports, would face a 30% withholding tax, said experts.
Answer Reality views – Talks about FATCA
FATCA has nothing to do with the Indian Black Money and Indian Citizens
Let us understand FATCA in short
The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010.
FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts
FATCA focuses on reporting:
By U.S. taxpayers about certain foreign financial accounts and offshore assets
By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest
The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.
The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires foreign financial institutions to report to the Internal Revenue Service (IRS) about their U.S. clients. Congress enacted FATCA to make it more difficult for U.S. taxpayers to conceal assets held in offshore accounts and shell corporations, and thus to recoup federal tax revenues.
In very simple language we can say that if a USA citizen hides money in a bank in other country, it is the duty of that bank to inform the IRS the tax department of US about that
If that bank fails to do so the US government will punish that bank
Because of FATCA law American tax collection and revenue will increase, and rich US citizens are opposing it because they will have to pay taxes on the money hidden in tax heaven nations also
The United States collaborated with other governments to develop two model intergovernmental agreements (IGAs) to implement FATCA.
All IGAs contemplate that a partner government will require all foreign financial institutions (FFIs) located in its jurisdiction (that are not otherwise exempt) to identify U.S. accounts and report information about U.S. accounts.
Both Model 1 and Model 2 IGAs can be implemented without having in effect a double tax convention or tax information exchange agreement with the United States.
IGAs with partner jurisdictions facilitate the effective and efficient implementation of FATCA.
They remove domestic legal impediments to compliance.
They reduce burdens on FFIs located in partner jurisdictions.
India needs to introduce similar law which will make it compulsory for the all international and national banks or financial institutions to inform tax department about the money transactions of Indian citizens
If they fail to do so they will be fined, they will not be allowed to do business in India or Indian stock markets they will be banned forever
Para III TOI –
India and other countries have to sign the inter-governmental agreement by December 31 to ensure that the tax liability does not kick in from January 2015.
The UPA government had inked FATCA but a formal signing of the agreement is yet to take place.
Answer Reality views –
India should sign the FATCA and should bring the Indian style FATCA and should ask the all countries to sign it.
PARA IV TOI –
The impact will go beyond the US, experts said, as any move to reveal the names in public without launching prosecution will choke government's efforts to get more information about those stashing illicit wealth abroad from other tax jurisdictions.
"You can forget about getting any information from the Swiss authorities if the names become public," said a tax practitioner.
During talks with an Indian delegation led by revenue secretary Shaktikanta Das, Switzerland had recently agreed to share information related to the so-called HSBC account holders, if the government completed independent investigations. In addition, it had shown willingness to sign the automatic exchange of information agreement.
Similarly, others pointed out that the proposed Automatic Exchange of Information under the G20 framework contained a confidentiality clause and the 48 "early adopters", including India, are to sign the agreement before 2017.
"Given the strict privacy laws, any government will have doubts about sharing names if they become public," said an expert.
The government has repeatedly said that it is bound by confidentiality provisions and can only reveal the names once prosecution is launched. In fact, German authorities had lodged a strong protest after the names on a list shared by the government with a petitioner were leaked.
Answer Reality views –
No one is revealing names in public the names will be revealed before Supreme Court of India
Germany bought the stolen list, India can do the same
US said we will ban give the details and pay the fines everyone obeyed because US government is honest and there executive is honest
India can say that we will Ban
US and Europe Markets needs us
India does not need US and Europe
We must remember India is going to become largest buyer of everything from US and Europe soon
Once we ban few nations all other countries will come in line and will sign and do as India demands
Supreme Court order and direction is right step and in a right direction
It has not broken any International law or treaty or confidentiality clause
Suggested Reading
TOI article
Black money: SC order may impact other tax treaties
Reality views by sm –
Wednesday, October 29, 2014
Tags - TOI FATCA
