During the period 2009-2023, India and 12 other Asian member countries of the Global Forum have earned additional revenues (taxes, interest and penalties) of Euro 21.8 billion through the use of ‘Exchange of Information on Request (EOIR)’ and ‘Automatic Exchange of Information (AEOI)’, including voluntary disclosure programmes and offshore tax investigations.
The report of the Global Forum on ‘Tax Transparency in Asia (2024)’ released by the OECD today shows that the network of most Asian members of the Forum (the international body engaged in the implementation of information exchange) covers more than 140 countries. India has the most extensive network with information exchange relationships with 171 countries and has a significant advantage of this mechanism. China has a network of 166 countries and Singapore has a network of 155 countries. Since country-wise revenue data is confidential, it was not shared.
Between 2009 and 2017, information was primarily exchanged ‘on request’ and hence information was exchanged only when the requesting authority suspected tax evasion or tax avoidance. The implementation of automatic exchange of information has become a real game-changer for many countries, including India – which for example receives periodic data of bank account details from Switzerland under the automatic route.
The report pointed out that ASEAN members participating in the automatic exchange of information also receive information on financial assets held abroad by their tax residents. Such information is a powerful tool for tax authorities to detect undeclared financial assets or taxable income of their tax residents and enforce their domestic tax laws. In 2023, they reported receiving information on more than 51 million financial accounts, containing assets worth a total of 3.7 trillion euros.
Benefit
Of the 171 agreements India has signed, 42 were made through the Convention on Mutual Administrative Assistance in Tax Matters (MAAC) – a multilateral instrument that countries use to exchange information for tax purposes. 98 are complemented by MAAC and 31 are not complemented by MAAC.
Zayda Manatta, head of the Global Forum secretariat, told TOI, “With the MAAC, any jurisdiction can significantly expand its network for information exchange without entering into bilateral negotiations. In fact more than 145 jurisdictions are parties to the MAAC, so when signing the MAAC, a jurisdiction gains access to information held in all these other parties. Negotiating bilateral treaties or agreements takes a lot of time and resources, so the MAAC makes this process easier, as it is a single instrument, and its clauses are already defined. It also provides access to all multilateral automated information exchange frameworks, including the Common Reporting Standard (for automatic exchange of financial accounts information) and country-by-country reporting, which does not require additional bilateral negotiations.”
“Another advantage of the MAAC is that it is fully aligned with exchange of information (EOI) standards, in that there are no unreasonable limitations on exchange (such as restricted access to banking information or domestic interests in the information to be exchanged), which is not always the case with other agreements or treaties that also provide for EOI,” he added.
Crypto-asset reporting framework:
“Work is progressing rapidly to implement the recently approved Crypto-Asset Reporting Framework (CARF) on a broad basis,” Manatta said.
Under India’s G20 Presidency, in September last year, G20 leaders called for the accelerated implementation of CARF. The global forum was asked to identify an appropriate and coordinated timeline for commencement of exchanges by the relevant jurisdictions, taking into account the aspiration of many of these jurisdictions to commence CARF exchanges by 2027, and to report on the progress of its work in our future meetings.
“A dedicated CARF group, of which India is a member, has been set up to take the work forward. The group plans to complete the commitment process of the global forum at the plenary meeting in November – including the generally expected timelines,” Manatta said.
He pointed out that even before the launch of the Global Forum commitment process, 58 Global Forum members have announced their intention to implement CARF in time to begin exchanges under CARF in 2027. “Of course, the commitment to be made in November is open to all these jurisdictions and also to those who have not joined the Joint Statement but are interested in implementing CARF,” he added.
