India on 3 June 2015 joined the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information (AEOI).
The declaration to comply with the provisions of the MCAA was signed in Paris by Mohan Kumar, the Indian ambassador to France.
The participation in the agreement will help India in curbing financial crimes especially instances of tax evasion.
Under the agreement, all the signatory countries, including India, are bound to collect and automatically exchange tax information as prescribed by the Organisation for Economic Co-operation and Development’s (OECD) Common Reporting Standard (CRS).
To be able to comply with the agreement, amendments have been made to section 285BA of the Income Tax Act, 1961 as incorporated in the Finance Act, 2014.
Key Features of Multilateral Competent Authority Agreement (MCAA)
• It is based on Article 6 of the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Multilateral Convention) which states that two or more parties can mutually agree to exchange information automatically.
• It implements the OECD’s Standard for Automatic Exchange of Financial Information (AEOI).
• It requires the Competent Authorities of participating jurisdictions to collect and automatically exchange tax information as prescribed by the OECD’s Common Reporting Standard (CRS). Under the agreement, bulk taxpayer information will periodically be sent by the source country of income to the country of residence of the taxpayer.
• It is very wide in scope and obliges the treaty partners to exchange a wide range of financial information, including that about the ultimate controlling persons and beneficial owners of entities. Previously, information was exchanged between countries on the basis of specific requests only.
• Even though it is signed on a multilateral basis, the actual exchange of information will occur in a bilateral manner.
• It has been developed by the OECD in cooperation with G20 and the European Union (EU).
• So far, 60 countries, including India, joined the agreement and it is set to become operational in 2017, by which about 94 countries are expected to sign it.
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When: 3 June 2015