Organisation for Economic Co-operation and Development Current Affairs - 2019

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India, Switzerland Automatic Exchange of Financial Account Information kicks in

Automatic Exchange of Information (AEOI) Regime between Switzerland and India kicked off from September 1, 2019. Under this mechanism, India will start receiving information on all financial accounts held by Indian residents in Switzerland, for the year 2018. Central Board of Direct Taxes (CBDT) has hailed this move as a significant step in the government’s fight against black money and end of “Swiss bank secrecy” era.

About Automatic Exchange of Information (AEOI)

It is the exchange of information between countries without having to request it. It aims to reduce global tax evasion.  It is to be carried out under Common Reporting Standard (CRS).

CRS is agreed global standard for it which has been approved by Organisation for Economic Co-operation and Development (OECD) in 2014. It is global reporting standard for such exchange of information, which takes care of aspects such as confidentiality rules and data safeguards.

India-Switzerland AEOI: Both countries had signed joint declaration on the introduction of the AEOI in tax matters on a reciprocal basis in November 2016. Under it-

  • Both countries intend to start collecting data in accordance with global AEOI standard in 2018 and to exchange it from 2019 onwards.
  • Both jurisdictions will inform each other of any relevant developments in respect to implementation of OECD CRS in their respective domestic laws.
  • Each jurisdiction will confirm that it has informed other jurisdiction about the modalities made available to persons making voluntary disclosure of their financial assets for smooth transition to system of automatic exchange of information.

Significance of AEOI

It is likely to shed more light on wealth stashed away by Indians in Swiss bank accounts, for so long governed by strict local rules of secrecy. Through this mechanism, banking details of Indians with accounts in banks in Switzerland will be available to tax authorities (mainly CBDT) in India. Indian tax authorities will receive information in respect of all financial accounts held by Indian residents in Switzerland of calendar year 2018. It will also include details for accounts closed in 2018 will also be available. It should be noted that under this mechanism, India will not receive information on bank accounts prior to 2018.

Counterfeit, Pirated Goods and Global Trade

The assessment  by EU Intellectual Property Office (EUIPO) and the Organisation for Economic Co-operation and Development (OECD) carried out based on data from almost half a million customs seizures by international enforcement agencies highlights the following:

  • Global sales of counterfeit and pirated goods have increased to USD 522 billion a year, amounting to a whopping 3.3 per cent of world trade.
  • The share of counterfeit goods has witnessed a considerable rise since its previous 2016 estimate of 2.5 per cent of global trade.
  • Counterfeit goods represented 121 billion Euros worth of imports into the European Union alone which amounted for a massive 6.8 per cent of total imports into the bloc, up from five per cent in 2016.
  • Counterfeiting and piracy posed a major threat to innovation and economic growth, at both EU and global level.
  • Companies which were most affected by counterfeiting and piracy were mainly based in developed OECD nations like the United States, Japan, South Korea and EU states.
  • Even businesses in China, Brazil and Hong Kong are being increasingly hit.
  • Countries exporting the most counterfeit and pirated goods were China, Hong Kong, United Arab Emirates, Turkey, Singapore, Thailand, India and Malaysia.

The EUIPO has expressed deep concerns about the rise in the counterfeit and pirated goods and called for coordinated action, at all levels, to fully tackle the menace of piracy and counterfeit products.