Now members can get details about taxpayers from another country
In a major easing of disclosure norms to help nab tax evaders and stub the black money menace across the world, Paris-based Organisation for Economic Cooperation and Development (OECD) has amended its rules on obtaining classified tax information by partner-countries.
By updating Article 26 of the model tax convention, which stands for the international standard on exchange of information related to financial data, including instances of black money and money laundering, the OECD has sought to allow the member-countries to obtain information about a group of tax payers from another country, without verifying their identities separately.
While Switzerland has been the first to respond, a significant beneficiary of this relaxation in regulation, among other nations, would be India as the measure seeks to increase tax transparency between nations.
This is because India also deploys the OECD model convention to elicit and obtain classified tax information from foreign nations.
“The OECD has updated Article 26 which sets out the international standard on exchange of information … The standard provides for information exchange on request, where the information is foreseeably relevant for the administration of the taxes of the requesting party, regardless of bank secrecy and a domestic tax interest,” the organisation said in a statement, pointing out that the amendment would explicitly allow for group requests, unlike earlier.
“This means tax authorities are able to ask for information on a group of taxpayers, without naming them individually, as long as the request is not a ‘fishing expedition’. This update represents a step forward towards more transparency,” it said.
Switzerland has been quick in its response to the amendment and adhering to the new international standard, ostensibly to shrug off the taint of being a safe haven for illicit funds and under tremendous global pressure in this regard. It said foreign countries could now seek banking and other financial details about a ‘group of persons’ without identifying them individually.
However, ‘fishing expeditions’ would still remain prohibited for any exchange of information.
In a statement from Bern, Switzerland’s Federal Department of Finance said the OECD had amended its ‘Model convention on tax administrative assistance’ following which group requests had been now included in the standard.“Switzerland’s representative also accepted this amendment on behalf of the Federal Council [of the country],” it said.
“Now international administrative assistance has to be granted also for groups of taxpayers and not only in individual cases. In the case of group requests, the persons concerned must be identified by means of specific search criteria,” the Swiss Finance Ministry said, emphasising that the “so-called fishing expeditions” or requests without concrete indications remain expressly prohibited.