OECD Current Affairs

India-Switzerland ink agreement automatic sharing of tax-related information

India has signed agreement with Switzerland for automatic sharing of tax-related information from January 1, 2018 with an aim to combat black money.

Prior to it, India had to ask Switzerland for specific bits of information against the Indian account holder in Swiss banks. But due to its earlier secretive laws it could delay or deny information altogether.

Background

Switzerland always has been at centre of debate on black money allegedly stashed by Indians abroad. It is infamously known for very strong secrecy walls around its banking practices till few years ago. In recent past, huge global pressure has resulted in Switzerland relenting on tough secrecy clauses its local laws gave to banks.

The signing of agreement comes after completion of parliamentary procedure in Switzerland for changing domestic secretive banking laws and signing of mutual agreement between India and Switzerland. Both countries in November 2017 had signed a joint declaration for the implementation of Automatic Exchange of Information (AEOI). It provided that both countries will start collecting data in accordance with global standards in 2018 and exchange it from 2019 onwards. The AEOI conforms to norm set by Organisation for Economic Co-operation and Development (OECD) for tax transparency.

Significance

Under the automatic information exchange framework, confidentiality and data protection requirements is to be strictly followed. This process will ensure that signatory always maintains control over its exchange partners and treatment of data exchanged as per OECD norms. The automatic exchange of information will discourage Indians from stashing black money in Swiss banks.

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India ranks third in global index of countries with most confidence in their government: OCED Report

India ranked third in the Organisation for Economic Co-operation and Development’s (OECD) Government at a Glance 2017 report. It states that Narendra Modi led NDA coalition has secured 73% trust of people, third highest in the world after Indonesia and Switzerland.

OECD’s Government at a Glance report presents an index of countries that trust their governments the most. It determines government’s trust levels by whether or not people consider their government stable and reliable, if it’s able to protect its citizens from risk and whether it can effectively deliver public services. The report cites data collected by Gallup World Poll (GWP), which collects evidence from perception surveys to measure the level of trust on an annual basis for OECD countries

Key Highlights

The 2017 edition of the report based on Gallup World Poll for 2016 states that, Indonesia and Switzerland with 80% people having trust in their government rank first and second respectively. Whereas 73% of Indians trust their central government.

The report also states that the number of people who trust the government in India has fallen by 9% points between 2007 and 2016. The figure for India in 2007 was 82%, 73% in 2014, 55% in 2012, 70% in 2009. Globally on an average, only 42% of citizens have confidence in their government, down from 45% in 2007.

About Organisation for Economic Co-operation and Development (OECD)

OCED is an international economic organisation of 34 countries to stimulate economic progress and world trade Founded: 1961. It defines itself as a forum of countries committed to democracy and the market economy. It provides common platform for members to compare policy experiences, seek answers to common problems, identify good practices etc. Most OECD members are regarded as developed countries i.e. high-income economies with very high Human Development Index (HDI). Its headquarter is in Paris, France.

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