Over a year after signing the pact for automatic exchange of information, India has received the first set of data about the account details of its nationals in Swiss banks. Switzerland’s Federal Tax Administration (FTA), in a statement, said it has exchanged information on financial accounts with 75 countries, out of which 63 reciprocated, under the global framework of the automatic exchange of information (AEOI).
- India and Switzerland had, for automatic sharing of financial account information, signed a Joint Declaration on November 22, 2016 for activation of the AEOI in tax matters between the two countries.
- It was decided that from September this year, India will receive information about financial accounts held by Indian nationals in Switzerland for the calendar year 2018 and later for subsequent years, which would help the authorities trace unaccounted income and assets of Indian nationals in Switzerland and bringing the same to tax.
- The use and disclosure of the information received is though governed by the confidentiality provisions of the India-Switzerland tax treaty. The AEOI relates to accounts that are officially in the name of Indians, and they might include those used for business and other genuine purposes.
- In total, the FTA sent information on around 3.1 million financial accounts to the partner states and received information on around 2.4 million from them. The largest exchange was with Germany (in both directions), as was the case in the previous year.
- The data was collected by the FTA from around 7,500 institutions including banks, trusts and insurers. In the case of 12 nations, Switzerland received information but did not provide any, either because those nations do not yet meet the international requirements on confidentiality and data security (Belize, Bulgaria, Costa Rica, Curaçao, Montserrat, Romania, Saint Vincent and the Grenadines, Cyprus) or they chose not to receive data (Bermuda, British Virgin Islands, Cayman Islands, Turks and Caicos Islands).
- The OECD Global Forum on Transparency and Exchange of Information for Tax Purposes reviews the implementation of the AEOI. As per OECD data, updated till October 4, 2019, India sent information to 60 countries (data relating to calendar year 2017 that was sent in 2018).
- The FTA said it cannot provide any information on the amount of financial assets. Identification, account and financial information is exchanged, including name, address, state of residence and tax identification number, as well information concerning the reporting financial institution, account balance and capital income.
- The exchanged information allows the cantonal tax authorities to verify whether taxpayers have correctly declared their financial accounts abroad in their tax returns.
- The new framework would expand the cooperation on sharing details of foreign clients on evidence of wrongdoing provided by India and some other countries.
- The tax department had detected suspected black money running into thousands of crores of rupees, post investigations on global leaks about Indians stashing funds abroad, and has launched prosecution against hundreds of them, including those with accounts in the Geneva branch of HSBC.
- India is among the 75 countries with whom the Swiss Federal Tax Administration has exchanged information on financial accounts.
- The information exchange has taken place under the framework of global standards on AEOI (Automatic Exchange of Information), which provides for exchange of information on active financial accounts and those accounts that were closed during calendar year 2018.
- The next round of information exchange will take place in September 2020.