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Offshore attractions




Last year the Panama Papers lifted the veil on the illicit accounts of a huge number of rich and famous people from a host of countries stashing away money in tax havens. Those disclosures came to light when someone broke into the computers of the law firm, Mossack Fonseca, and provided the print-outs to the International Consortium of Investigative Journalists. Several Indians were holding tax-evaded money in the tax havens, such as the British Virgin Islands.

The resulting public outcry forced the authorities to investigate. According to an official Finance Ministry statement, over two hundred such account-holders were prosecuted and in a majority of cases slapped with tax demands and requisite penalties. Last week, another secret tranche of papers was exposed world-wide. Some 13.4 million files from two offshore service providers, Bermuda's Appleby and Singapore's Asiaciti, relating to 19 tax havens, were sourced by the German newspaper, Suddeutsche Zeitung, which in turn shared these with the ICAJ.

These feature well-known figures from the world of industry, business, Bollywood, politics and, of course, media as well. Among the prominent foreigners, the most famous, of course, is the British Queen whose private estate has invested millions in a Cayman Islands fund. There are a couple of senior figures in the Trump Administration and members of Vladimir Putin's inner circle, including a company linked to his son-in-law. Canadian Prime Minister Justin Trudeau's financial manager too figures in the list. Again, world-renowned universities, such as Oxford and Cambridge, besides a number of equally well-known British colleges, have invested their endowment funds in offshore entities.

Whether the Indians uncovered by the Paradise Papers had lawful accounts can be known only after the probe announced by the Finance Ministry is completed. They may well be holding legitimate accounts in tax havens, given that an increasing number of Indians operate legally in multi-jurisdictions. Yet an air of suspicion surrounds such accounts. Distrust and suspicion might be a hangover of the socialist era, but is not misplaced since most Indian businesses do tend to cut moral and legal corners. As in the Panama Papers, it is hard to rule out wrong-doing in the latest expose.

India, on its part, should consider making its tax laws simple and rates attractive to obviate the attraction of tax havens. Tax evasion, at least, partly, stems from high rates and irksome requirements. Complexity and excessiveness of taxation ought to be removed to facilitate easier compliance. Simultaneously, ways to stanch the growth of black money at source will help end the flight of funds to tax havens.
Post date: 2017-11-10 20:19:08
Post date GMT: 2017-11-10 14:49:08
Post modified date: 2017-11-10 20:19:08
Post modified date GMT: 2017-11-10 14:49:08
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