In a major step towards fighting the menace of black money stashed abroad, India got the first tranche of Swiss Bank details of its residents under the Automatic Exchange of Information agreement.

India is among 75 countries with which the Federal Tax Administration (FTA) exchanged information on around 3.1 million financial accounts.

Following the first exchange last year, in which no technical problems were encountered, this year, the AEOI involved a total of 75 countries.

With 63 of these countries, the exchange of information was reciprocal. In the case of 12 countries, Switzerland received information but did not provide any, either because those countries do not yet meet the international requirements on confidentiality and data security (Belize, Bulgaria, Costa Rica, Curacao, Montserrat, Romania, Saint Vincent and the Grenadines, Cyprus) or because they chose not to receive data (Bermuda, British Virgin Islands, Cayman Islands, Turks and Caicos Islands).

Currently, around 7,500 reporting financial institutions (banks, trusts, insurers, etc.) are registered with the Federal Tax Administration. These institutions collected the data and transferred it to the FTA.

The FTA sent information on around 3.1 million financial accounts to the partner states and received information on around 2.4 million from them.

The largest exchange was with Germany (in both directions), as was the case in the previous year. The FTA cannot provide any information on the amount of financial assets.

In June 2016, Prime Minister Narendra Modi had met Swiss President Johann Schneider-Ammann at Geneva and discussed the need for expeditious exchange of information for combating tax evasion together with an early start to negotiations on the Agreement for Automatic Exchange of Information.

The automatic exchange of information with India is being implemented based on the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA).

The MCAA is based on the international standard for the exchange of information developed by the OECD.

The Central Board of Direct Taxes (CBDT), which frames policies for the Income Tax Department, has said that this is a significant step in the government’s fight against black money.

Switzerland has committed itself to adopting the global standard for the international automatic exchange of information in tax matters. The legal basis for the implementation of the AEOI in Switzerland came into force on January 1, 2017.

Identification, account and financial information is exchanged, including name, address, state of residence and tax identification number, as well information concerning the reporting financial institution, account balance and capital income.

The exchanged information allows the cantonal tax authorities to verify whether taxpayers have correctly declared their financial accounts abroad in their tax returns.

Next year, Switzerland’s network of AEOI partner states will expand further, to around 90 countries. The OECD Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) reviews the implementation of the AEOI.

(With agency inputs)