India in Agreements with Singapore, UAE and Hong Kong to Tackle Siphoning of Black Money
21 Dec 2015

India’s Central Board of Direct Taxation (CBDT) announced this week that India is close to reaching agreements with Singapore, UAE and Hong Kong to better deal with the challenges of preventing the movement of black money between jurisdictions.

According to the Central Bureau of Investigation in India, Indian citizens have $500 billion worth of illegal funds stored in tax havens across the world. Transfer mispricing has been identified as a common method of illegally removing money from the country.

A revised note is expected before 31 December 2015 advising financial institutions, regulators and tax department officers on compliance to norms agreed at the recent meeting in Delhi of the Automatic Exchange of Information group (AEOI). When automatic exchange of information is implemented, it will enable information sharing between 75 countries that have signed the Multilateral Competent Authority Agreement (MCAA).

Once Singapore and UAE sign the MCAA, India will be able to automatically exchange information with the jurisdictions from January 2018. However, with increased information sharing come increased concerns about data security. To deal with this, the CBDT has established an Information Security Committee to ensure confidentiality of all data received from other countries.

Non-resident Indians, including green card holders and students residing in the United States, are treated by the AEOI as covered under the Foreign Account Tax Compliance Act (FATCA) arrangements between India and the United States.

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