The offshore accounts of Indian citizens are expected to be substantially curtailed from 2017 since India has committed itself to “common reporting standards” on the automatic exchange of tax information with Britain and several countries.
India’s participation in global efforts to clamp down on tax evasion was reiterated during the eighth UK-India Economic and Financial Dialogue here in January between finance minister Arun Jaitley and chancellor George Osborne.
A joint statement after the dialogue said: “The UK and India share a common commitment to address cross-border tax evasion and avoidance…Both sides have committed to the Common Reporting Standards (CRS) on Automatic Exchange of Tax Information (AEoI) and will begin exchange in 2017.”
India joined the global efforts during a meeting of the Organisation for Economic Cooperation and Development’s (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes in Berlin in October 2014.
Under the agreement, unprecedented levels of information, including account balances, interest payments and beneficial ownership, will be shared with Britain by countries around the world as part of an international clampdown on tax evasion.
The global standard of automatic information exchange was developed by the OECD and agreed in July 2014.
A total of 57 countries and jurisdictions – known as the Early Adopters Group – have committed to a common implementation timetable which will see the first exchange of information in 2017 in respect of accounts open at the end of 2015 and new accounts from 2016.
A further 34 countries have committed to implement the new global standard by 2018.
The “Berlin declaration on transparency and fairness in tax matters” said: “Under the new global standard a wide range of information will be exchanged on offshore accounts, including account balances and beneficial ownership. This will make it possible to stamp out tax evasion and tackle tax fraud. This action by the dishonest few reduces public revenues, undermines confidence in the fairness of our tax systems and increases the burden on honest taxpayers.”
It added: “We call on the few countries which have not yet done so to match this commitment. The ability of tax evaders to hide is vanishing quickly. Tax evaders have two choices – come forward or be caught.”