Switzerland has ratified a historic agreement with India, paving a path for tonnes of black money hoarded in foreign bank accounts to make its way back home. The European tax haven famous for secrecy, Switzerland on Friday ratified automatic exchange of financial account information with India along with 40 other countries.
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.
As per the draft notification approved by the council in its meeting on Friday, the decision is not subject to any referendum—which means there should be no further procedural delay in its implementation.
However, the agreement is contingent upon confidentiality and data security standards observed by data recipients. To this effect, before first automatic exchange, Switzerland will check whether India, other jurisdictions meet security standards.
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 decision follows hectic parleys between India and Switzerland for introduction of the AEOI (Automatic Exchange of Information) 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.
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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.
(With Inputs from PTI)