India’s fight against alleged black money hidden abroad will receive a major boost in September in the form of a first round of detailed financial information on all Indians with bank accounts in Switzerland, including including those closed since last year.
The details that Switzerland would share with Indian tax authorities under the Automatic Exchange of Information (AEOI) would include account numbers, credit balance and all kinds of financial income for every Indian customer of every Swiss financial institution.
The first round in September would be followed by further shipments on an annual basis, according to Switzerland’s Federal Department of Finance (FDF).
This would be in addition to details already shared by Switzerland with India for nearly 100 Indian entities, including individuals and companies, upon presentation of prima facie evidence of their financial wrongdoing, as part of a bilateral pact of administrative assistance in tax matters.
State Minister for External Affairs V Muraleedhran also said on Wednesday in a written response to a question from Lok Sabha that India would automatically start receiving information from September on financial accounts held in Switzerland by residents. Indians.
In addition, the tax treaty between India and Switzerland makes it easier to receive information on request for cases under investigation, he said.
“Information received on request or on an automatic basis may include information on people allegedly involved in corruption,” the minister said.
When asked if the government would reveal these names, however, the minister said that “the use and disclosure of information” is governed by confidentiality provisions.
Explaining the AEOI with India, which entered into force on January 1, 2018, the FDF said Switzerland, as a global wealth management hub, is committed to contributing to the integrity of the system. international finance and a level playing field.
“Switzerland applies international transparency standards and therefore actively supports India in its fight against tax fraud and tax evasion,” he said.
Under the AEOI, detailed financial information on all Indian residents who have an account maintained by a Swiss financial institution in 2018 will be provided for the first time to the Indian tax authorities in September 2019 and annually thereafter.
The information would include accounts that were closed in 2018, he said.
It is feared that many Indians closed their accounts after a global crackdown on black money led Switzerland to bow to pressure to open its banking sector to scrutiny in order to dispel the perception of long date that Swiss banks are a safe haven for undisclosed funds.
However, AEOI would only apply to accounts that are officially in the name of Indian residents and they could include those used for business and other genuine purposes.
In an explanatory file on the AEOI, the FDF said that if a taxpayer in country A (India) had a bank account in Switzerland, the bank would disclose the financial account data to the Swiss authorities, who would automatically forward the information to the tax authorities. in country A (India).
The Indian authority would thus be able to examine the data of the foreign financial account and impose the necessary measures, if necessary, against the taxpayer.
The information would be grouped into three broad categories of identification, account and financial details.
Identity details would be name, address, date of birth, and tax identification number, while account information would include the account number as well as the name and address of the financial institution.
Financial information would include interest income, dividends and other financial income, income from certain insurance policies, credit balances and proceeds from the sale of financial assets.
Besides India and Switzerland, a number of other countries have also signed the AEOI pacts as part of a global crackdown on tax evasion.
Information on financial accounts was successfully exchanged by Switzerland with 36 jurisdictions for the first time in September 2018, while India is reportedly in the next round of such countries this year.
Switzerland agreed to start the automatic exchange of information with India after a process of several months, including the development of new laws and their passage by their Parliament and the review of the necessary legal framework in India on the data protection and confidentiality.
In its latest progress report on AEOI implementation, the Swiss State Secretariat for International Finance (SIF) said India had shared information with 58 partner countries in 2018 and had “reasonable” data privacy and security laws. He found no “substantiated negative feedback” from other countries, individuals or companies indicating that India had any relevant loopholes in these laws.
SIF also found that India has a good network of over 100 partner countries with mutual assistance treaties. It also did not find any documented results of serious human rights violations due to taxation or data exchange.
In addition, the Swiss Embassy in Delhi has indicated that issues such as the AEOI framework and Switzerland’s cooperation are being positively discussed in India as part of the country’s fight against escape. tax and were seen as an important tool in dealing with the black money problem. .
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