OECD’s Automatic Exchange of Information (AEOI) framework
- April 28, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
OECD’s Automatic Exchange of Information (AEOI) framework
Subject: International Relations
Section: International
Why in News?
India wants non-financial assets included in OECD information exchange framework. At present, the OECD’s AEOI framework provides for sharing of financial account details. India is pushing to widen the scope of the common reporting standard (CRS) at the G20 grouping to include non-financial assets like real estate properties under the automatic exchange of information among OECD countries.
What is OECD’s AEOI Framework
- Provides for sharing of financial account details among signatory countries with an aim to check tax evasion.
- India currently has AEOI with 108 jurisdictions for receiving financial information and with 79 jurisdictions for sending information automatically.
- Flow of information has helped us in increasing tax collection and revenue buoyancy has increased
Related Provisions
OECD also approved the Crypto-Asset Reporting Framework (CARF) – Provides for the reporting of tax information on transactions in Crypto-Assets in a standardized manner, with a view to automatically exchanging such information.
OECD’s Tax Transparency report
- Asian nations estimated to have lost €25 billion in revenue in 2016 due to tax evasion and illicit financial flows.
- 4 per cent of Asia’s financial wealth amounting to Euro 1.2 trillion was held offshore, leading to a potential annual revenue loss of Euro 25 billion for the region in 2016.
- Slower economic growth, increased government expenditure on public health, social and economic support, and other areas make the fight against tax evasion and other illicit financial flows (IFFs) even more pressing.
- Asia accounted for 38.8 per cent of the estimated USD 7.8 trillion lost by developing countries due to IFFs between 2004-2013.
- The ‘Tax Transparency in Asia 2023’ report was launched at the meeting of the Asia Initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. Currently 167 jurisdictions are members of the Global Forum which include all G20 countries.
About Common Reporting Standard (CRS)
- The Common Reporting Standard (CRS) is developed in response to the G20 request and approved by the OECD Council on 15 July 2014.
- It requires jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
- It specifies the financial account information to be exchanged, the financial institutions required to report, the different types of accountsand taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.
About OECD
- The Organisation for Economic Co-operation and Development (OECD) is an international, intergovernmental economic organization of 38 countries that works to build better policies for better lives.
- OECD was founded in the year 1961 to stimulate world trade and economic progress headquartered at Paris, France.
- OECD originated in 1948, as the Organisation for European Economic Co-operation (OEEC) to govern the predominantly US-funded Marshall Plan for post-war reconstruction on the continent.
- Most OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries. OECD members are democratic countries that support free-market economies.
- India is a key partner of OECD.