United States and India Sign Agreement to Share Tax Information

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New Delhi – India and the United States earlier this month came one step closer to end tax evasion with the signing of an agreement which underscores growing international cooperation to promote transparency between the two nations on tax matters.

The Inter Governmental Agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA) was signed by the US Ambassador to India Richard Verma and Indian Revenue Secretary Shaktikanta Das.

At the time of signing, Revenue Secretary Shaktikanta Das stated, “Signing the IGA with US to implement FATCA today, is a very important step for the Government of India, to tackle offshore tax evasion. It reaffirms the Government of India’s commitment to fight the menace of black money. It is hoped that the exchange of information on automatic basis, regarding offshore accounts under FATCA would deter tax offenders, would enhance tax transparency and eventually bring in higher equity in to the direct tax regime which necessary for a healthy economy.”

Ambassador Verma, who signed on behalf of the United States, stated, “The signing of this agreement is an important step forward in the collaboration between the United States and India to combat tax evasion. FATCA is an important part of the U.S. Government’s effort to address that issue.”

FATCA is rapidly becoming the global standard in the effort to curtail offshore tax evasion. To date, the United States has IGAs with more than 110 jurisdictions and is engaged in related discussions with many other jurisdictions.

The United States enacted FATCA in 2010 to obtain information on accounts held by US taxpayers in other countries. It requires US financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on US account holders. As per the IGA, FFIs in India will be required to report tax information about US account holders directly to the Indian Government which will, in turn, relay that information to the IRS. The IRS will provide similar information about Indian account holders in the United States. This automatic exchange of information is scheduled to begin on September 30, 2015.

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