NEW DELHI: Prime Minister Narendra Modi took up the black money issue with Switzerland on Monday in his meeting with President Johann Schneider-Ammann, and called for an early agreement for automatic exchange of information (AEOI) on tax issues. The two countries have decided to soon start negotiations for the same.
After the meeting, Modi said fighting the black money menace was a shared priority for India and Switzerland. “We discussed the need for early and expeditious exchange of information to bring to justice the tax offenders,” Modi said.
Switzerland is currently discussing an ordinance for automatic information exchange in line with the OECD-adopted new global standard for the international automatic exchange of information in tax matters (AEOI standard). Almost 100 countries want to adopt the AEOI standard.
In a report on May 29, TOI had said PM Modi will take a detour to Switzerland on his way to the United States and that AEOI was on his agenda for the visit.
For long the favourite tax haven of those looking to park their wealth offshore, Switzerland has already signed agreements for introduction of AEOI with nine countries, apart from the European Union. These include Japan, Australia, Norway, South Korea and Canada. Without getting into the specifics, Switzerland said the two countries stressed their shared resolve to take action against tax fraud and tax avoidance, underlining the high quality of their cooperation in this area. Switzerland had earlier provided significant information about Indian HSBC account holders who, according to finance minister Arun Jaitley, had stashed away Rs 6,000 crore in the bank. The government has now filed criminal cases against them.
According to OECD, the new global standard on AEOI reduces the possibility for tax evasion and provides for the exchange of non-resident financial account information with tax authorities in the account holders’ country of residence. “Participating jurisdictions that implement AEOI send and receive pre-agreed information each year, without having to send a specific request,” the Swiss government said, adding that AEOI will allow discovery of formerly undetected tax evasion and black money.
Under AEOI, which will be implemented bilaterally, all Swiss banks will have to identify and keep track of their Indian clients. The banks will keep tax authorities in their own country, in this case Switzerland, informed about tax issues related to the client. The Swiss authorities will then be expected to pass on the information to their Indian counterparts.