Switzerland today ratified automatic exchange of financial account information with India and 40 other jurisdictions to facilitate immediate sharing of details about suspected black money even as it sought strict adherence to confidentiality and data security.
Adopting the dispatch on introduction of the AEOI, a global convention for automatic information exchange on tax matters, the Swiss Federal Council said the implementation is planned for 2018 and the first set of data should be exchanged in 2019.
The council, which is the top governing body of the European nation, will soon notify the Indian government about the exact date from which the automatic exchange would begin.
As per the draft notification approved by the council in its meeting today, the decision is not subject to any referendum -- which means there should be no further procedural delay in its implementation.
The issue of black money has been a matter of big debate in India and Switzerland has been long perceived as one of the safest havens for the illicit wealth allegedly stashed abroad by Indians.
Today's decision follows hectic parleys between India and Switzerland for introduction of the AEOI (Automatic Exchange of Information) on tax matters under the guidance of G20, OECD and other global organisations.
The council said the proposal to introduce AEOI with India and others "met with widespread approval from the interested parties who voiced their opinions in the consultations".
"In concrete terms, the AEOI will be activated with each individual state or territory by means of a specific federal decree within the framework of this dispatch," it added.
The exchange of information itself will be carried out based on the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, which is in turn based on the international standard for the exchange of information developed by the Organisation for Economic Co-operation and Development (OECD).
The council said it will prepare a situation report before the first exchange of data, which is planned for autumn 2019.
"In the process, it will be checked whether the states and territories concerned effectively meet the requirements under the standard, especially those concerning confidentiality and data security.
"It is important for the Federal Council that a level playing field be created among states and that all major financial centres, in particular, be included. This year, Switzerland has introduced the AEOI with 38 states and territories, including all EU member states, and data will start to be exchanged with them in 2018," it added.
Switzerland is satisfied with various regulations in India, including changes in the Information Technology Act, with respect to ensuring protection of privacy, according to a document released by the Swiss government today.
Among others, it has mentioned that more than Rs 4,000 crore worth of black money was disclosed by entities during the compliance window declarations in 2015.
Confidentiality and data protection requirements are to be strictly followed under the automatic information exchange framework.
Section 7 of the MCAA relates to the notification process required to bring the agreement into effect between any two signatories.
This process ensures the signatory always maintains control over its exchange partners and the treatment of the data exchanged, as per the OECD.
Last November India and Switzerland inked the pact for the implementation of AEOI.
The joint declaration was signed between the two countries amid the Indian government stepping up efforts to clamp down on the menace of black money.
The Indian government, in November 2016, had said it would be possible 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.
Back in January 2012, India signed the Convention on Mutual Administrative Assistance in Tax Matters.
It is a multilateral agreement that promotes international co-operation while respecting the rights of taxpayers.
Among others, the convention provides for administrative co-operation between the parties in the assessment and collection of taxes in order to combat tax avoidance and evasion.