The Group of 20 (G20) on Sunday decided to put in place a mechanism for automatic exchange of tax information between various countries by 2017, a development which will help India in dealing with the menace of black money stashed abroad. The group, which represents about 85% of the global economy, also vowed to take more measures to push global GDP by an additional 2%, or over $2 trillion, by 2018.
India has been facing difficulties in getting information on cases of suspected tax evasion from other countries, specially Switzerland, which has been maintaining that such details cannot be shared without specific proof of financial irregularities by the concerned Indian client of Swiss banks.
The new framework would mark a significant forward movement from the current practice of information exchange mostly on the basis of requests and only in the cases of suspected tax evasion or other financial crimes.
“We will begin exchanging information automatically between each other and with other countries by 2017 or end-2018,” the G20 communique said.
The new global standard, as formulated by the Organisation for Economic Cooperation and Development in July, would be common for all countries. It would facilitate a “systematic and periodic transmission of bulk taxpayer information by the source country of income to the country of residence of the taxpayer concerning various categories of income or asset information”
Minister of state for finance Nirmala Sitharaman, RBI governor Raghuram Rajan and finance secretary Arvind Mayaram are representing India at the two-day meeting. The summit will be followed by a meeting in Brisbane in November.
Commenting on the global GDP push, Sitharaman said: “At the moment, on the 2% requirement, it is broadly understood that about a 1.8% is already achievable. It is only the balance on which a little more push is required.”
The IMF World Economic Outlook in July had said the global economy would expand by 3.4% in 2014 and improve to 4% next year.