The Indian government recently entered into a tax information exchange agreement with the Cayman Islands. The important features of the agreement are as follows:

  • The agreement is based on international standards of transparency and exchange of information.
  • The agreement covers "taxes of every kind and description".
  • Information sought under the agreement must be foreseeably relevant to the administration and enforcement of the domestic laws of the contracting parties in respect of taxes covered by the agreement.
  • Information must be treated as confidential and can be disclosed only to specified persons or authorities - namely, the tax authorities or the authorities concerned with the determination of a tax appeal.
  • Information may be declined if:
    • it is contrary to agreement;
    • the requesting party has not availed of all means available in its own territory;
    • disclosure of information would be discriminatory with respect to a national or citizen of the requested party, as against a national of the requesting party; or
    • disclosure of information is contrary to the public policy of the requested party.

Tax information exchange agreements with the Isle of Man, Bahamas and British Virgin Islands were also entered into during 2011, with a view to enabling the Indian tax authorities to obtain information in respect of tax evasion sought to be carried out through some of these jurisdictions. It has also been reported that India signed a tax information exchange agreement with Guernsey in December 2011, but this has not yet been notified.

For further information on this topic please contact Pranay Bhatia at Economic Laws Practice by telephone (+91 22 6636 7000), fax (+91 22 6636 7172) or email ([email protected]).