The term ‘tax haven’ used for certain countries has led to protest and even threatening by them that they wouldn’t be cooperating with their probe of black money.
The Central Board of Direct Taxes (CBDT), have asked the Indian investigating agencies to avoid using the term ‘tax haven’ while making legal requests, as countries helping India in unearthing hidden wealth have termed it offensive.
Some jurisdictions where Indian investigators have reached in pursuit of their black money probe in the past include St Kitts and Nevis in the Caribbean Islands, Isle of Man, Cook Islands, British Virgin Islands, Samoa and Nauru among others.
An official said today that some of these countries have taken exception to them being dubbed as ‘tax havens’.
The Foreign Tax and Tax Research (FT and TR) wing has framed Exchange of Information (EoI) protocols and it processes treaties like Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreements (TIEAs) to execute such requests.
The expression “tax haven” is used to indicate a jurisdiction, country or territory where the rate of taxes is either negligible or extremely low and which have a strict mechanism for financial secrecy and client data protection.
Official sources said while the Board had flagged the issue with the field investigation offices of the IT department when the Manual of EoI was framed some time ago, the word “tax haven” was still being used by investigators in their official dossiers.
They said some small countries, which are important with regard to key probes leading to their shores, had taken up the issue at the global level in general and, in some cases, with India.
CBDT has asked the taxman to refrain from using the word anywhere and at any stage when cooperation is being sought on cases of black money and wealth stashed away abroad by Indians so as to not bring about a situation which “offends” the partner country and thereby creates obstacles in getting good results in such probe cases.
The FT and TR wing which operates under various units collects requests from investigation offices of the IT department and other probe agencies and subsequently sends them abroad.
