Black Money: Switzerland Ratifies Automatic Exchange of Information with India, 40 Others (Download PDF)

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Automatic exchange of financial account information has been ratified by Switzerland has 41 countries along with India using which Switzerland will share information about suspected black money with this 41 nations.

  • According to the Swiss Federal Council the top governing body of Switzerland, the implementation of this agreement was planned for 2018, so that first set of data most probably exchanged in 2019.
  • The Swiss Federal Council will notify the exact date of automatic information exchange soon because there is no any technical delays for the implementation.
  • However, the Swiss banks also searching for safeguard to protect their client’s details about misuse which can be expose them in crimes such as kidnapping or blackmail, that’s way Swiss Council had said that they will prepare a situation report before the first exchange of data.
  • According to the process, it will be determine that states and territories concerned have put in place a standard, particularly those which are concerning confidentiality and data security.
  • It will be considered that the democratic processes in these states and territories are strong or not and ratio of corruption is high or not etc.

Background

  • Switzerland is being supposed as one of the safest havens for hiding black money in abroad by Indians.
  • Switzerland is world’s largest home for abroad wealth in the information sharing agreement or in ending tax avoidance.
  • India and Switzerland has jointly sign ‘Joint Declaration‘for implementation of Automatic Exchange of Information (AEOI) to fight agents black money in November 2016.
  • Under the guidance of G20, OECD and other global organisations, introduction of the AEOI (Automatic Exchange of information) on tax matters were approved by Switzerland.
  • After implementation of AEOI based on Common Reporting Standards, will place a system wherein bulk taxpayer information which will be sent from the source country of income to the country of residence of taxpayer periodically.
  • So, India will access information virtually from almost all the countries even including offshore financial centres.
  • AEOI will be implementing based on the Multilateral Competent Authority Agreement (MCAA).

About MCAA

  • MCAA has been signed by 53 jurisdictions in July 2015 based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters.
  • India joined MCAA in June 2015.
  • MCAA is multilateral convention on administrative assistance in taxation matters developed by the Organisation for Economic Co-operation & Development (OECD).
  • It aims to exchange a wide range of financial information among countries periodically and automatically.
  • It will establish a system whereby bulk taxpayer information is periodically sent from source nation to the country of residence of the taxpayer.
  • Its aims to prevent international tax evasion.
  • It helps member countries to curb tax evasion and deal with the problem of black money.

- Published/Last Modified on: June 24, 2017

International Relations/Organizations

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