India figures among the top-three countries getting detailed information from Switzerland about bank accounts and beneficiary ownership of entities established by their residents in the Alpine nation, according to the latest study by OECD’s Global Forum on transparency and exchange of information for tax purposes.
In its latest peer review report on the exchange of information on request, the Global Forum, which is tasked to assess the standard of exchange of information on request by various jurisdictions worldwide and their compliance, said Switzerland is rated ‘largely compliant’.
India is also rated as ‘largely compliant’ by this OECD (Organisation for Economic Cooperation and Development) body.
The Global Forum review said Switzerland has made “significant improvements in the areas of availability of legal ownership information, exchange of information on deceased persons and requests based on stolen data”.
It, however, said some challenges remain with regard to the availability of beneficial ownership information and proper implementation of rights and safeguards to ensure effective exchange of information and confidentiality requirements.
While the issue of alleged black money parked by Indians in Swiss banks has been a political hot potato in India for many years, Switzerland has been trying hard for a long time now to ward off a widely-prevailing perception about its financial institutions being used to hide undeclared wealth by people from various countries.
Under mounting global pressure, the famed secrecy walls surrounding Swiss banks have already crumbled over the last few years and Switzerland has been making an all-out effort to present itself as a clean global financial centre while dispelling the long-held perception of its banks being secret wealth vaults.
With regard to India itself, Switzerland has shared detailed information in more than 500 cases over the past one year regarding the accounts in Swiss financial institutions of Indian individuals and enterprises suspected to have indulged in tax frauds and other financial irregularities, while the numbers increase multi-fold after taking into account such cases from across the world, officials said.
In addition to such exchange of information on request and on submission of prima facie evidence about financial wrongdoings, Switzerland has entered into pacts with more than 100 countries, including India, for automatic exchange of information on tax matters.
The latest peer review by the Global Forum, referring to the period from July 2015 to June 2018, named India among the top-three jurisdictions to which Switzerland provided information on request. The other two countries were France and Germany.
The review also named Italy, Netherlands and Spain among other significant EOI (Exchange of Information) partners for Switzerland.
Without disclosing the numbers for individual countries, the Global Forum review report said Switzerland received 3,252 individual requests for information.
These requests related to legal ownership information (128 cases), beneficial ownership information (100 cases), accounting information (318 cases), and banking information (1,748 cases).
In addition, Switzerland received eight group requests and 16 bulk requests with a total of 99,893 cases.
Overall, Switzerland received around 100,000 requests from various foreign tax authorities between 2015 and 2018.
The Global Forum noted that Switzerland has increased its staff resources and optimised its procedures to deal with the growing number of requests.
In the Global Forum’s view, there is a need for improvement regarding the availability of information on beneficial owners, the rights of individuals and legal entities that are the subject of administrative assistance requests (notification and right of appeal), and confidentiality requirements.
While Switzerland provided a full response within 90 days in case of more than one-fifth of the requests, almost half of the requests were replied to fully within 180 days. In the case of 70 per cent requests, the full response was provided within a year, while 16 per cent requests took more than a year for a complete reply.
Information was declined with ‘valid reasons’ in case of nearly 7 per cent requests, while requests were withdrawn by the requesting jurisdiction in 3 per cent cases.
Another 3 per cent requests were pending at the date of the review, the Global Forum report said.
The Global Forum uses peer reviews to assess the application of the international standard on the exchange of information upon request (administrative assistance) in individual states.
The second round for Switzerland began at the end of 2018 and, as with all Global Forum members, involved stricter evaluation criteria, such as the quality of administrative assistance requests, group requests and the identification of beneficial owners.
While Switzerland has been sharing details with India under the ‘exchange of information on request’ for many years, the first set of data under the new automatic information exchange framework was shared by it in September 2019 and the second round would take place in September this year.
Under the exchange of information on request, important details have been shared in hundreds of cases so far, helping India launch prosecution against a large number of alleged tax evaders.
These details pertain to a large cross-section of people and enterprises ranging from the erstwhile royal family members to real estate tycoons to little-known software companies suspected to have links with large corporates.
Several trusts set up in overseas tax havens using a complex maze of entities have come under the scanner of Indian and Swiss authorities for suspected tax evasion by parking of illicit funds in Switzerland-based banks and their details have also been shared.