OECD issues new standard to combat blackmoney; India to follow

• New “game-changing” mechanism by OECD to combat the menace of offshore tax evasion, a protocol to which India is a signatory with the purpose of tackling black money
• The Organization for Economic Cooperation and Development will formally present the standard for the endorsement of G20 finance ministers.
• The G20 invited the OECD to develop a global standard on automatic exchange of information in 2013 and remains the driving force behind the move toward greater tax transparency worldwide
• India has already signed the OECD’s global standard for automatic exchange of information between tax authorities two years back and once the new format is implemented, the country will follow the new protocols envisaged in it
• New protocols are aimed to smoothen the automatic exchange procedures which are used to crack cases of offshore tax evasion and illegal stashing of money.
• The standard calls on jurisdictions to obtain information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis
• It sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions
• OECD incorporates progress made in this area within the European Union and ongoing efforts to reinforce global anti-money laundering standards
• This new standard on automatic exchange of information will ramp up international tax co-operation, putting governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion