Switzerland has approved an automatic information exchange pact with India and a number of other countries on black money, a development that would enable authorities in India get instant access to details on Indians with Swiss accounts
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The Commission for Economic Affairs and Taxes of the Council of States - a key panel of the Swiss Parliament's upper house - approved the proposed pact with India as also with 40 other countries.
The panel, however, suggested strengthening the provisions for individual legal claims and has asked the Swiss government to submit to Parliament an amendment "to strengthen concrete individual legal protection and to ensure that no exchange of information can take place for individual cases where a violation of essential legal claims is likely."
The panel's proposal will now have to be approved by the upper chamber of Swiss Parliament, the Council of States, in the winter session beginning 27 November.
The Swiss move will help remove the veil of secrecy in Swiss bank accounts and give India unfettered access to details of alleged black money hoarders.
Under the system of automatic exchange of information, the Swiss authorities will allow access to account number, name, address, date of birth, tax identification number, interest, dividend, receipts from insurance policies, credit balance in accounts and proceeds from sale of financial assets.
The access to bank data will, however, be through government channel with the Swiss government forwarding the relevant information relating the bank account to the authorities in India.
This means that the domestic bank client confidentiality in Switzerland will remain unaffected by the AEOI.
Switzerland has joined a global alliance of nearly 100 countries who have so far committed to adopt global standards for the automatic exchange of information (AEOI) in order to check cross-border tax evasion.
As per the AEOI proposal, approved by the lower house of Swiss parliament, the National Council, the process of automatic information exchange on financial accounts between India and Switzerland will take effect from the next year with the first exchange of information materialising in 2019.
The proposed amendments to legal safeguards for bank customers will satisfy rightwing opponents to the treaty for information sharing who cited corruption and other risks in countries like India.
While approving the pact, the economic affairs committee of the Upper House has now asked the government to put some additional safeguards in the automatic information exchange framework with India and other countries.
With regard to the control mechanism decree, it has sought addition of a paragraph obliging the Federal Council - the top decision-making body of the Swiss government equivalent to a Cabinet - to examine regularly and from the point of view of risks whether the partner states (such as India) still fulfil the decisive conditions and then to consult the competent parliamentary committees.