India-Switzerland tax crackdown set to continue with increased data sharing

India-Switzerland tax crackdown

7th August 2019

Two contracting hotspots that we’ve written about a lot recently, India and Switzerland, have both individually been working hard to crack down on tax evasion and institute tougher compliance measures. Be it through the record breaking Swiss tax amnesty, or India’s cutting edge machine learning technology, it’s clear both nations are at the forefront of the global push to implement tougher tax systems.

However, most recently, the countries have been working closely together to collect lost revenue. As a result of international agreements such as the CRS, Swiss banks will now begin sharing details of all Indian taxpayers with accounts in the country. With both countries featuring near the top of many international contractors’ wish lists, it’s important that agencies placing workers in either nation are aware of the latest developments. Here’s what you need to know about the India-Switzerland tax crackdown

India-Switzerland tax crackdown: Data sharing

India’s and Switzerland’s first exchange of data will take place in September, with the arrival of the first set of detailed financial information on Indian citizens with Swiss bank accounts. This is a triumph for the country, which has made cracking down on offshore evasion a key aim since the arrival of the Modi government in 2014, with Swiss banks a main area of focus.

Under the agreement, Switzerland will share account numbers, credit balance and all kinds of financial income for Indian clients with Swiss bank accounts. The first dispatch of data will be followed by regular reports on a yearly basis.  Identity details will include names, addresses, dates of birth and tax identification numbers. The financial information available will be wide-ranging, including interest income, dividends and other financial revenue, receipts from certain insurance policies, credit balances and proceeds from the sale of financial assets.

Further co-operation

This is not the first major co-operation that has contributed to the cross-country tax crackdown, with India recently seeking Switzerland’s assistance in a large probe against six companies of the Essar group.

In fact, details of more than 100 Indian nationals have been shared in the past year by the Swiss government, with the Indian Income Tax Department and the Enforcement Directorate investigating a wide range of individuals, including those whose names appeared in the leaked HSBC and Panama lists.

The vast range of tax evaders in the country can be illustrated from the professions of those investigated, which included individuals from a wide selection of sectors, from real estate, financial services, and technology to textiles, engineering goods, gems and jewellery.

Recruiters should be aware

Ultimately, with more countries collaborating over tax evasion, be it through signing treaties, or sharing information under the Common Reporting Standard, authorities now have far greater power to shutdown non-compliance.

While in this case, the India-Switzerland tax crackdown is in the spotlight, there are similar partnerships and agreements sprouting up across the globe. This had led to an environment where remaining compliant has become extremely difficult for overseas contractors, making it a real possibility that workers unintentionally find themselves breaching the law – and face huge penalties.

Unfortunately, agencies are not exempt from risk, especially with the introduction of laws such as the Criminal Finances Act 2017, which essentially stipulates that a recruitment agency could be held fully liable for the non-compliant actions of a contactor.

Therefore, in order to avoid any potential negative consequences, it is advisable to employ the services of an expert contractor management firm that knows how to operate in the uncertain landscape of global tax and compliance. Contact us today:


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