Related Topics: Money Laundering, Common Reporting Standard (CRS)
- Banking details of Indians with accounts in Switzerland will be available to tax authorities in India, as the automatic exchange of information regime kicked off between the two countries.
- The first automatic exchange of financial account information (AEOI) under the provisions common reporting standard will start from September, 2019.
What is AEOI?
- It provides for the exchange of non-resident financial account information with the tax authorities in the account holders’ country of residence.
- Participating jurisdictions that implement AEOI send and receive pre-agreed information each year, without having to send a specific request.
Why AEOI is needed?
- It will enable the discovery of formerly undetected tax evasion.
- It will enable governments to recover tax revenue lost to non-compliant taxpayers, and will further strengthen international efforts to increase transparency, cooperation, and accountability among financial institutions and tax administrations.
- It will generate secondary benefits by increasing voluntary disclosures of concealed assets and by encouraging taxpayers to report all relevant information.
What India will get under AEOI?
- The details that Switzerland would share with Indian tax authorities under the Automatic Exchange of Information (AEOI) framework would include account numbers, credit balance and all kinds of financial income for each Indian client of every Swiss financial institution.
- This would be in addition to details already being shared by Switzerland with India for nearly 100 Indian entities, including individuals and enterprises, on submission of prima facie evidence of their financial wrongdoings, under a bilateral pact for administrative assistance on tax matters.
- Under the AEOI framework, detailed financial information on all Indian residents that 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 on a yearly basis thereafter.
- The information will include accounts that were closed during 2018.
- The step is likely to shed more light on the wealth, Indians have stashed away in Swiss bank accounts, for so long governed by strict local rules of secrecy.
- In 2018, data from Zurich-based Swiss National Bank (SNB) had shown that after declining for three years, money parked by Indians in Swiss Banks rose 50 per cent to CHF (Swiss Franc) 1.02 billion (Rs 7,000 crore) in 2017 over the previous year.
- According to Central Board of Direct Taxes (CBDT), this is a significant step in the government’s fight against black money and the era of “Swiss bank secrecy” will finally be over from September, 2019.
[Sources: The Hindu, Indian Express, Business Standard]