Switzerland gears up for automatic exchange of tax info

Switzerland has been perceived for long as a safe haven for alleged illicit funds or black money

Under global pressure including from India, Switzerland on Wednesday began a process to put in place the necessary framework for automatic exchange of information on tax matters with the US, European Union and "further selected countries".

In the initial phase, these countries would include those with which Switzerland has "close economic and political ties", but it is not yet clear whether these nations would include India.

For determining these "selected" countries in the initial phase, Swiss government would also take into account whether such jurisdictions provide their taxpayers (having accounts in Swiss banks) with "sufficient scope for regularisation".

Switzerland has been perceived for long as a safe haven for alleged illicit funds or black money and it has been facing intense global pressure to lift the veil of secrecy about account and client details of its banking institutions.

Taking forward a process to implement a new global standard prepared by Paris-based OECD and approved by the G-20 last month, Swiss government's highest decision-making body Federal Council on Wednesday adopted "definitive negotiation mandates for introducing he new global standard for the automatic exchange of information in tax matters with partner states".

"The introduction of the automatic exchange of information with foreign countries will be conducted by means of agreements with partner countries.

"Moreover, implementing legislation will be required in national law. This is currently being prepared by the Federal Department of Finance (of Switzerland) and will be submitted to Parliament together with the negotiated agreements," the Swiss government said after a Federal Council meeting.

The existing legislative framework excludes automatic exchange of information.

In a statement, the Swiss government said that introduction of automatic tax information exchange is to be negotiated with the European Union.

"Negotiations on the automatic exchange of information will be initiated with further selected countries. In an initial phase, consideration will be given to countries with which there are close economic and political ties and which, if appropriate, provide their taxpayers with sufficient scope for regularisation," it noted.