India-Switzerland to start automatic sharing of tax info from 2019
What's the story
India and Switzerland have signed a deal that would allow both to automatically share tax-related data from 2019.
The Automatic Exchange of Information (AEOI) will be implemented on January 1, 2018; the first year will involve collection of data in accordance with global standards.
Switzerland is a known safe haven for illicit wealth. However, India's rank in Swiss bank holdings has been falling consistently.
History
Black money a longstanding issue between India and Switzerland
It's suspected that several Indians have stashed unaccounted wealth in Swiss banks, making the subject a longstanding debate between India and Switzerland.
In January 2012, India signed the Convention on Mutual Administrative Assistance in Tax Matters.
In November 2016, India and Switzerland signed an agreement for the AEOI's implementation, after New Delhi stepped up efforts to quash black money.
Do you know?
AEOI follows intense parleys between India and Switzerland
The AEOI comes after intense negotiations between India and Switzerland under the aegis of the G20, OECD and other organizations. The Swiss Federal Council said it was "met with widespread approval from interested parties". Switzerland ratified it in June'17 with India and 40 other jurisdictions.
Impact
What does the deal mean for the two countries?
With the declaration, Switzerland has agreed to conform to global standards on automatic exchange of information.
India, which will receive "financial information of accounts held by Indian residents in Switzerland...on an automatic basis" from September'19, has assured confidentiality of the information.
Several Indian requests for information on Indians holding accounts in Swiss banks are currently pending.
Status
India's rank in Swiss bank holdings has been consistently falling
India's rank has been slipping consistently in terms of money nationals hold with Swiss banks. In July'17, it ranked 88th, down from 66th in 2014.
The total amount has been falling since 2006, when it touched a high of Rs. 23,000cr.
Jan Langlo, Association of Swiss Private Banks' Manager, said it's practical for Indians to open accounts in Asian hubs than in Switzerland.