Switzerland on Friday ratified automatic exchange of financial account information with India and 40 other nations, paving way for easy identification of black money hoarders and bringing it back to the national economy. With this move, Indian authorities would be able to access financial transactions by its citizens with Swiss banks after September 2019.
Once the sharing starts, it will be possible for authorities to receive the financial information of accounts held by Indian residents in Switzerland from September 2018 and subsequent years, on an automatic basis. Switzerland’s approval to the historic agreement with India is a big boost for Modi government’s crackdown against black money.
Adopting the dispatch on introduction of the AEOI (Automatic Exchange of Information), a global convention for automatic information exchange on tax matters, the Swiss Federal Council said the implementation was planned for 2018 and the first set of data should be exchanged in 2019.
The council, which is the top governing body of the European nation, will soon notify the Indian government about the exact date from which the automatic exchange would begin.
As per the draft notification approved by the council in its meeting today, the decision is not subject to any referendum -- which means there should be no further procedural delay in its implementation.
The issue of black money has been a matter of great debate in India and Switzerland has been long perceived as one of the safest havens for the illicit wealth allegedly stashed abroad by few Indians.
Today's decision follows hectic parleys between India and Switzerland for introduction of the AEOI on tax matters under the guidance of G20, OECD and other global organisations.
The council said the proposal to introduce AEOI with India and others "met with widespread approval from the interested parties who voiced their opinions in the consultations".
"In concrete terms, the AEOI will be activated with each individual state or territory by means of a specific federal decree within the framework of this dispatch," it added.
The exchange of information itself will be carried out based on the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, which is in turn based on the international standard for the exchange of information developed by the Organisation for Economic Co-operation and Development (OECD).
The council said it will prepare a situation report before the first exchange of data, which is planned for autumn 2019.
"In the process, it will be checked whether the states and territories concerned effectively meet the requirements under the standard, especially those concerning confidentiality and data security”.
"It is important for the Federal Council that a level playing field be created among states and that all major financial centres, in particular, be included. This year, Switzerland has introduced the AEOI with 38 states and territories, including all EU member states, and data will start to be exchanged with them in 2018," it added.