Come September 2019, the Government will be able to automatically access transactions made by Indians in the Swiss banks. In a big boost to NDA Government’s fight against black money, Switzerland on Friday ratified Automatic Exchange of Financial Account Information (AEOI) with India and 40 other countries. India and Switzerland had in November 2016 signed joint declaration of AEOI.
This will facilitate immediate sharing of details about suspected black money and all other transactions by Indians in Switzerland from 2018 and subsequent years. The pact will be effective from September 2019. However, India and other countries will have to strictly adhere to the clause of confidentiality and data security on the information provided by Switzerland.
The Indian Government has given assurance to the Swiss authorities that the names disclosed will be kept confidential.
The Government had in November 2014 submitted a list of 627 names of Indians holding accounts in foreign banks to the Supreme Court in a sealed cover. The apex court had set up a Special Investigation Team (SIT) in July, 2011 to look into the issue of black money stashed in foreign accounts.
The decision by Swiss authorities comes as a big relief for the Modi Government, who had in his election promises vowed to launch a fight against black money and bring it back from foreign havens.
Adopting the dispatch on introduction of the AEOI, a global convention for automatic information exchange on tax matters, the Swiss Federal Council said the implementation is 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.
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 Indians. Friday’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.