Switzerland is moving towards "greater transparency" in providing administrative assistance on tax matters, a global body said amid India making efforts to bring back illicit funds stashed by its citizens in Swiss banks.
Long perceived as a safe haven for unaccounted wealth, Switzerland has been facing international pressure to shed its banking secrecy practices including from India.
The Global Forum on Transparency and Exchange of Information for Tax Purposes said that some countries, including Switzerland, have demonstrated continuing progress toward implementation of the international standard for exchange of information on request.
Citing progress made by the Alpine nation on transparency in tax matters, the Forum has admitted Switzerland into phase 2 of the peer review.
"Switzerland will now be assessed on its effective implementation of exchange of information on request; that report is due in the second half of 2016," Paris-based think tank OECD said in a statement.
The Forum, which has more than 120 members including India, examines compliance with administrative assistance standards by means of peer reviews done in two phases.
In phase 1, an examination is conducted to check whether the necessary legal foundations are in place for information exchange in accordance with international norms. Phase 2 examines effectiveness of such exchanges.
"The decision recognises Switzerland's efforts to comply with the international standard for the exchange of information upon request. Phase 2 of the peer review on the practical implementation of Switzerland's system should start in the fourth quarter of 2015," Swiss government said in a separate statement.
The development comes at a time when India is in discussions with Swiss authorities seeking details about its citizens having illicit wealth in Swiss banks.
"It is the result of intensive work on Switzerland's part, which is committed to a competitive financial centre that complies with international standards," State Secretary Jacques de Watteville, head of the State Secretariat for International Financial Matters (SIF), said.
Phase 1 peer review report on Switzerland's was published in June 2011, wherein the Forum had concluded that the country's legal and regulatory requirements "still had to be improved".
Switzerland has revised its Tax Administrative Assistance Act (TAAA). The changed legislation makes provision for an exception regarding the prior notification of persons affected by an administrative assistance request and thereby meets the requirements of the international standard for the exchange of information upon request.
In certain cases, the affected taxpayers can now be informed only after their data has been transferred to requesting foreign authorities instead of in advance.
These changes came into effect from August 2014. Currently, Switzerland has "57 signed, standard-compliant double taxation agreements (DTAs) and tax information exchange agreements (TIEAs)," as per Swiss Finance Ministry's statement.
In December last year, Swiss Parliament approved the bill for implementing the revised recommendations of the Financial Action Task Force (FATF) on combating money laundering and terrorist financing.
Under phase 2, Switzerland's practices in terms of administrative assistance in tax matters would be scrutinised.
