{"id":1333,"date":"2023-04-28T00:00:00","date_gmt":"2023-04-28T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/28-04-2023\/scope-of-automatic-exchange-of-information-aeoi-framework\/"},"modified":"2023-04-28T00:00:00","modified_gmt":"2023-04-28T00:00:00","slug":"scope-of-automatic-exchange-of-information-aeoi-framework","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/28-04-2023\/scope-of-automatic-exchange-of-information-aeoi-framework","title":{"rendered":"Scope of Automatic Exchange of Information (AEOI) Framework"},"content":{"rendered":"<p><span style=\"font-size:13pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong><u>In News<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">India is pressing for expanding the scope of the <\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>Common Reporting Standard (CRS) <\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">at the G20 to include <\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>non-financial asset<\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">s, like real estate properties, under the <\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>Automatic Exchange of Information (AEOI)<\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"> among<\/span><\/span><\/span><a href=\"https:\/\/www.nextias.com\/current-affairs\/14-05-2021\/facts-in-news\" style=\"text-decoration:none\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#1155cc\"><u> <\/u><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#1155cc\"><strong><u>OECD countries.<\/u><\/strong><\/span><\/span><\/span><\/a><\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong><u>The rationale behind India&#8217;s Demand\u00a0<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">As per the OECD\u2019s Tax Transparency report, amid the current geopolitical and debt crisis, there is a need to <\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>check tax evasion<\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"> and <\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>illicit financial flows, <\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">especially by Asian nations which are estimated to have lost \u20ac25 billion in revenue in 2016.<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">The current global landscape makes the fight against tax evasion and other illicit financial flows (IFFs) even more pressing: the aftermath of the COVID-19 pandemic and the geopolitical crisis resulted in slower economic growth<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">Tax evasion and other forms of IFFs are a global problem that hinder domestic revenue mobilisation.\u00a0<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">Therefore, there is a need to broaden the scope of AEOI so that the information could be used not only to check tax evasion but also for other non-tax law<\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong> enforcement purposes.<\/strong><\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>There is also a need to expand <\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">the CRS from financial to new other non-financial accounts and assets because the risks are not only in financial assets, there is a risk of tax evasion in non-financial and real assets, properties, etc.<\/span><\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong><u>About Automatic exchange of information (AEOI) framework<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">It provides for the automatic exchange of a predefined set of information between tax authorities.\u00a0<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">The AEOI Standard requires the annual exchange of information on financial accounts held by <\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>non-resident individuals and entities<\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"> in a pre-defined format.<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">The information exchanged includes details about the financial account (e.g. the financial institution maintaining it, the account number and the account balance) and details about the account holder (e.g. their name, address, date of birth, and taxpayer identification number).<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>Importance: <\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">Under the AEOI framework, signatory countries follow a CRS and obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">the AEOI Standard provides a powerful tool to help deter and identify offshore tax evasion through holding financial assets abroad.\u00a0<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">It provides for sharing of financial account details among signatory countries with the aim to check tax evasion.\u00a0<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>Developments:\u00a0 <\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">In August 2022, the OECD also approved the Crypto-Asset Reporting Framework (CARF) which provides for the reporting of tax information on transactions in crypto assets in a standardised manner, with a view to automatically exchanging such information.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>Indian Scenario:\u00a0 <\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">India currently has AEOI with 108 jurisdictions for receiving financial information and with 79 jurisdictions for sending information automatically.<\/span><\/span><\/span><\/li>\n<\/ul>\n<div>\n<table cellspacing=\"0\" style=\"border-collapse:collapse; border:none; table-layout:fixed; width:624px\">\n<tbody>\n<tr>\n<td style=\"background-color:#d9ead3; border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top\">\n<p><span style=\"font-size:13pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong><u>The Common Reporting Standard (CRS)<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">\u00a0It was developed in response to the G20 request and approved by the OECD Council in 2014.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">It calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.\u00a0<\/span><\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong><u>Non-financial assets<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">Non-financial assets held by households include in theory, both produced and non-produced nonfinancial assets and therefore include Dwellings and other buildings and structures and land improvements; Machinery and equipment including livestock; and even intellectual property products, such as software and literary originals, and non-produced assets such as land and taxi-licenses.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">In practice dwellings form by far the most significant component.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">Except for dwellings, only those assets owned by household unincorporated enterprises, and used in production, are included as non-financial assets.\u00a0<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">For example a car used by a household purely for household transport is not a nonfinancial asset whereas a car used by a selfemployed taxi driver is.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong><u>Do you Know?<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">The \u2018Tax Transparency in Asia 2023\u2019 report was launched at the meeting of the <\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"><strong>Asia Initiative<\/strong><\/span><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\"> of the Global Forum on Transparency and Exchange of Information for Tax Purposes.<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">Currently, 167 jurisdictions are members of the Global Forum which include all G20 countries.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">The report is a key output of the Bali Declaration.\u00a0<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">It aims to show the Asian countries\u2019 progress in the last decade and to guide the future work of the Asia Initiative.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#000000\">Source:<\/span><\/span><\/span><a href=\"https:\/\/indianexpress.com\/article\/business\/india-wants-non-financial-assets-included-in-oecd-info-exchange-framework-8580035\/\" style=\"text-decoration:none\" target=\"_blank\" rel=\"noopener\"><span style=\"font-size:12pt\"><span style=\"font-family:Arial\"><span style=\"color:#1155cc\"><u>IE<\/u><\/span><\/span><\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In News India is pressing for expanding the scope of the Common Reporting Standard (CRS) at the G20 to include non-financial assets, like real estate properties, under the Automatic Exchange of Information (AEOI) among OECD countries. The rationale behind India&#8217;s Demand\u00a0 As per the OECD\u2019s Tax Transparency report, amid the current geopolitical and debt crisis, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1334,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[56,30],"class_list":["post-1333","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","tag-agreements-involving-india-or-affecting-indias-interests","tag-gs-2"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/7307640Screenshot_6.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/1333","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=1333"}],"version-history":[{"count":0,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/1333\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/1334"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=1333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=1333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=1333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}