India and Switzerland sign agreement to end Swiss banking secrecy

From Sept '19, India will start getting financial info of Swiss banks' account holders on automatic basis

indian money swiss bank

In a step towards fighting black money stashed overseas, Switzerland on Tuesday agreed to automatic sharing of information with on Swiss bank accounts of Indians as of September 2018 and onwards.

They will not share details about accounts held prior to that period, while the first such exchange will happen in September 2019.

The ‘Joint Declaration’ for implementation of AEOI signed on Tuesday between and Switzerland provides that both countries will start collecting data in accordance with the global standards in 2018 and exchange it from 2019 onwards.

While Switzerland has conformed to the global standards on automatic exchange of information with the signing of the declaration, India, on its part, has promised to safeguard the confidentiality of the data.

“It will now be possible for to receive from September, 2019 onwards, the financial information of accounts held by Indian residents in Switzerland for 2018 and subsequent years, on an automatic basis,” said a Finance Ministry statement.

Swiss bank move too little, too late

The automatic exchange of information (AEOI) protocol signed between India and Switzerland on Tuesday, which comes into force from September 2019, is being seen by tax experts as a government effort, which is too little too late to get the undisclosed incomes of Indians stashed abroad.

Most tax consultants, who did not want to be identified, believe a three-year window for the AEOI protocol to come into effect would give Indians with income and assets in Switzerland enough time to move their illegal wealth to some other tax haven.

“Even if somebody has got money there they will just shift it to some other country with which India does not have automatic information exchange protocol,” said a tax expert.

Another tax analyst, who also did not want to be named, said if the government had actually been serious about getting back illegal money from overseas, they would have ensured immediate enforcement of the AOEL.

“The fact is that they (government) have given three years indicates that they just want to appease (the opposition) by saying we did something, don’t worry,” he said.

According to him, if the government had put “enough pressure” on the Swiss government, it could have got the AOEL rolling fast; “We don’t know what the dialogue between the governments of India and Switzerland was, so it is difficult to say whether it is doable or not but they should have put pressure on them saying take a month and give us the information”.