Switzerland' premiere governing body, Swiss Federal Council, has agreed to share financial data with India. The council agreed to ratify sharing of data under the codes of AEOI (Automatic Exchange of Information). Swiss law makers are expected to start the data-collection process in 2018 and share a first set of data with India in 2019.
The council said that its decision was "met with widespread approval from the interested parties who voiced their opinions in the consultations".
The Federal Council adopted the move in line with AEOI (Automatic Exchange of Information), a code that has been suggested by G20 and OECD as a measure to counter tax evasion. The AEOI standard governs how tax authorities in participating countries could exchange banking data at the same time safekeeping accounts of taxpayers.
Besides India, the exchange is also driven for 40 other jurisdictions, mainly EU member countries.
This ratification is expected to facilitate unearthing of black money, considering Switzerland has traditionally remained an elusive haven to stash unaccounted money. Indian diplomats and law makers had utilized the routes of G20, OECD and global entities to press for information exchange with Switzerland.
A Swiss government statement released in November 2016 concedes that intense lobbying from Indian authorities and meeting of high-confidentiality demands were top factors in the consideration for data-exchange. The country that practices a tradition of banking secrecy believes that India will safeguard its confidential data and use it for tax purposes only.
About six years ago, India and Switzerland had amended their bilateral tax treaty to enable India to obtain access to Indians holding secret accounts. India had also signed a double taxation avoidance agreement in 2011. A cause of worry in that year was the nearly $452 bn of a total of $1.4 tn black-money stashed from India in Swiss bank accounts.
India had in June 2015 signed a multilateral competent authority agreement (MCAA) on AEOI with countries such as France, Australia, Canada, Costa Rica, Indonesia and New Zealand.
SS Palanimanickam, the MoS for Finance while referring to the tweaks in the tax treaty said in Rajya Sabha that the tweaks would specific sharing of banking information as well as information not in domestic interests of respcetive countries. Read more about that here
Whether the data on black money would be made public still remains a matter of speculation, considering even if Switzerland co-operated, there would be no way for Indian authorities to make the data public.