Long before the Pandora leaks there had been the Swiss leaks and in between there were many, including Panama, Paradise, Mauritius, Luanda. As the ICIJ, in association with newsrooms around the world, has unraveled the murky details of how the wealthy hide their wealth, questions arise about the purpose of these revelations?
Influential personalities from politics, business, showbiz and sports grab the headlines whenever a new leak occurs. But what about after the limelight has shifted?
Government sources say black money investigations are long and arduous, with secrecy at the heart of them.
âWhile presentations are one-day headline fodder, tax investigations are not one-day cricket matches. They last for many years, âa government official said on condition of anonymity. He added that India had information on most of the people or entities on the list long before the media exposed them. They are collected through international financial information exchange treaties.
But many tax professionals see value in these âleaksâ.
âExhibits like these push in the direction of the need to comply with the laws of the land. Second, it creates the fear of escape. Both are extremely essential for governments to fight tax evasion, âsaid Girish Vanvari, founder of Transaction Square, a firm specializing in tax, regulation and business advice.
The government announced today that over Rs 20,000 crore of undisclosed income has been detected through investigations into the Panama and Paradise papers. This does not include the undisclosed income of Rs 8,000 crore that the government told Parliament it detected in 2017, from the Swiss Leaks.
ICIJ Pandora Documents Expose Offshore Transactions of the High and Powerful Like the King of Jordan, the Presidents of Ukraine, Kenya and Ecuador, the Prime Minister of the Czech Republic and the Former Prime Minister British Tony Blair. The files also reveal the financial activities of Russian President Vladimir Putin’s âunofficial propaganda ministerâ and more than 130 billionaires from Russia, the United States, Turkey and other countries.
The leaked documents come from 14 offshore service companies around the world who have established shell companies and other offshore nooks and crannies for clients often looking to keep their financial businesses in the dark. More than 700 Indian people and entities are linked to these offshore companies or trusts, as revealed by the ICIJ through its “leaks” for several years now.
“Being the beneficiary of a offshore trust does not in itself mean that it is a violation of any law, because you are only a beneficiary until something happens.” , said a prominent tax advisor among the Big Four accounting firms. Business outlook on condition of anonymity. “What needs to be checked is whether a particular trust owns property and / or wealth, and distributes income, which is ill-gotten or just black money,” added the tax expert.
The debate revolves around tax savings versus tax evasion.
But the burden of proving the evasion rests solely on the tax authorities. The government official quoted above tells us about an investigation into a prominent celebrity named in the 2016 Panama Papers. Name, âthe official exclaimed.
But there are also benefits the government has reaped from the ICIJ’s investigations.
âWhat’s in the public domain is just the tip of the iceberg. Several tax evasion cases emanating from the ICIJ leaks are blocked in various courts, many on the list have already paid, while many others have chosen VDIS to shed light, âVanvari said. VDIS is a voluntary income disclosure program that offers defaulters a chance to disclose their income and pay taxes at the going rates.
âThen there is also the aspect of on-shore trusts compared to off-shore trusts. As long as an individual or a company has legitimate activities abroad, offshore trusts have advantages, âanother tax expert explained to Business outlook.
ICIJ’s analysis of secret documents identified 956 companies in offshore havens linked to 336 high-level politicians and officials, including country leaders, ministers, ambassadors and others.