India gets 4th set of swiss bank account details under the agreed framework

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By Suraj Bediya

As part of the annual automated information exchange, under which Switzerland has exchanged information with 101 countries about roughly 34 lakh financial accounts, India has received the fourth set of Swiss bank account information for its citizens and organizations.

According to officials, the fresh information supplied with India relates to “hundreds of financial accounts,” including numerous instances of multiple accounts linked to certain people, corporations, and trusts.

They refused to give further details, citing the information exchange’s confidentiality clause and the potential harm it could do to future investigations, but they did claim that the data would be extensively used in investigations into possible tax evasion and other wrongdoings, such as money laundering and funding for terrorism.

The Federal Tax Administration (FTA) announced on Monday that Albania, Brunei Darussalam, Nigeria, Peru, and Turkey were five new countries that participated in the information exchange this year. Financial accounts climbed by about one lakh in number.

Although 74 nations received information in return, Switzerland did not provide any in the case of 27, including Russia. This is either because those countries do not yet fulfill the international standards for secrecy and data security, or they have chosen not to receive data.

Even though the FTA excluded the names and additional information of all 101 nations, officials claimed that India was among those who had received the information for the fourth year running and that the information shared with Indian authorities related to a sizable number of people and organizations with accounts in Swiss financial institutions.

The exchange took place last month, and the officials stated that Switzerland would share the following set of information in September 2023.

In accordance with AEOI (Automatic Exchange of Information), India acquired the initial set of information from Switzerland in September 2019. It was one of the 75 nations that received this information that year. India was one of 86 such partner countries in the previous year.

Experts say that because the AEOI data offers complete details of deposits and transfers as well as of all revenues, including those from investments in stocks and other assets, it has been very helpful in building a strong prosecution case against those who have any undeclared wealth.

The officials, who spoke on the condition of anonymity, stated that the information mainly relates to businesses, including non-resident Indians who have relocated to a number of South-East Asian nations as well as the US, the UK, and even certain African and South American nations.

After a protracted procedure that included an assessment of India’s essential legal framework for data protection and secrecy, Switzerland has finally agreed to the AEOI with India. Name, address, country of residence, tax identification number, reporting financial institution information, account balance, and capital gains are just a few of the identification, account, and financial details that were transferred.

Additionally, the sources noted that since receiving requests for administrative assistance in cases involving investigations into financial wrongdoings, including tax evasion, Swiss authorities had already supplied information on more than 100 Indian persons and businesses this year. In recent years, this count has remained essentially unchanged.

The majority of these cases involve older accounts that may have been closed prior to 2018, for which Switzerland provided information to India under a previous arrangement for mutual administrative assistance because Indian authorities had provided prima facie evidence of tax-related wrongdoing by those account holders. Only accounts that are open or were cancelled in 2018 are subject to the AEOI.

Some of these instances concern organisations that Indians established in foreign countries including Panama, the British Virgin Islands, and the Cayman Islands. The people involved in these cases are largely businessmen, but there are also some politicians, some former royals, and their families.

The officials, however, quoted strict confidentiality provisions governing the exchange framework as justification for their refusal to divulge specifics regarding the precise number of accounts or the amount of assets held in the accounts held by Indians, for which information had been shared with India.

Tax authorities can check if taxpayers have accurately disclosed their bank accounts in their tax forms thanks to the communicated information.

The AEOI framework is still unable to access information about donations to charitable organisations and other similar foundations, as well as information on investments in digital currencies, even though Switzerland agreed to share information about real estate assets owned by foreigners there last year.

This is regarded as a crucial turning point in the Indian government’s battle against allegedly hidden black money abroad because it will enable authorities to fully investigate the tax liabilities related to Indian-owned flats, apartments, and condominiums in Switzerland as well as the income generated from such properties.

The action takes significance on the part of Switzerland, which is making an effort to recast itself as a significant global financial hub while fending off the long-standing idea that the Swiss banking system serves as an alleged sanctuary for illicit funds.

The move, according to experts and those in the business of luring investments to Switzerland, would also go a long way toward dispelling the myth that all funds inflows into Swiss assets are illegal and would establish Switzerland as a preferred investment destination, including for real estate properties. Approximately 9,000 reporting financial organisations (banks, trusts, insurers, etc.), according to the FTA, gathered the information and gave it to the government.

The FTA provided information to the partner states about 34 lakh financial accounts and got information from them on 29 lakh financial accounts.

The statement read, “The FTA cannot provide any information on the amount of financial assets.”

The first such exchange in Switzerland took place at the end of September 2018, involving 36 nations; at the time, India was not on the list. The Global Forum of the Organisation for Economic Cooperation and Development (OECD) reviews the AEOI implementation.