In­dia Seeks to Re­open Panama Chan­nel to Dig up Dirty Money

Talks for ex­change of data to be restarted; tax haven may be named a ‘non-co­op­er­a­tive ju­ris­dic­tion’ if ac­cord not achieved

The Economic Times - - Front Page - Deepshikha.Sikar­war @times­group.com

New Delhi: Fol­low­ing the Panama Papers leak, In­dia is seek­ing to restart talks with the Cen­tral Amer­i­can coun­try on a Tax In­for­ma­tion Ex­change Agree­ment (TIEA) that can help un­cover in­for­ma­tion on wealth hid­den away from pub­lic scru­tiny. Talks with Panama on such an agree­ment aimed at in­for­ma­tion ex­change on tax of­fend­ers have been stalled since 2013.

“Ef­forts have be­gun to restart ne­go­ti­a­tions for TIEA,” said an of­fi­cial aware of the mat­ter, in­di­cat­ing the ur­gency over reach­ing an agree­ment in the wake of the leak. The Panama Papers were re­leased ear­lier this week.

Voy­age To Panama Talks with Panama on TIEA had stalled in 2013 TIEA to fa­cil­i­tate ac­tive ex­change of in­for­ma­tion Panama yet to com­ply with OECD trans­parency guide­lines It is yet to sign mul­ti­lat­eral con­ven­tion on ex­change of tax info

The de­tails were made pub­lic by the In­ter­na­tional Con­sor­tium of In­ves­tiga­tive Jour­nal­ists in col­lab­o­ra­tion with sev­eral news or­gan­i­sa­tions around the world and con­tains names of nearly 500 In­di­ans, in­clud­ing celebri­ties and in­dus­tri­al­ists who had al­legedly set up off­shore en­ti­ties in var­i­ous tax havens. The leaked data came from the Pana­ma­nian law firm of Mos­sack Fon­seca that helped set up off­shore com­pa­nies. In­dia can name Panama a ‘non-co­op­er­a­tive ju­ris­dic­tion’ if it doesn’t reach an ac­cord on the mat­ter, of­fi­cials said. The con­se­quence of such a clas­si­fi­ca­tion is that In­dia can levy a higher with­hold­ing tax of 30% on all pay­ments made and al­low no de­duc­tions of ex­pen­di­ture and al­lowances while com­put­ing tax in re­spect of trans­ac­tions with any en­tity from that coun­try.

In­dia has al­ready ex­er­cised this op­tion in the case of Cyprus.

Most of the ac­counts that have been re­ported as part of the Panama Papers have links to en­ti­ties in ju­ris­dic­tions with which In­dia has agree­ments, the British Vir­gin Is­lands for in­stance. In­dia also plans to use ex­change agree­ments with these ju­ris­dic­tions to get in­for­ma­tion on these en­ti­ties be­sides us­ing global fora such as the Fi­nan­cial Ac­tion Task Force.

Fi­nance Min­is­ter Arun Jait­ley has warned that those with il­le­gal ac­counts will be pur­sued. The gov­ern­ment has set up a multi-agency group to probe the off­shore ac­counts con­nected to In­di­ans and men­tioned in the Panama Papers. Panama has not joined the global the Mul­ti­lat­eral Con­ven­tion on Mu­tual Ad­min­is­tra­tive As­sis­tance in Tax Mat­ters (Mul­ti­lat­eral Con­ven­tion). The Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and Devel­op­ment has sin­gled out Panama as the last ma­jor hold­out that con­tin­ues to al­low funds to be hid­den off­shore from tax and law en­force­ment au­thor­i­ties. In­dia has signed TIEAs with a num­ber of fi­nan­cial cen­tres or tax havens, in­clud­ing British Vir­gin Is­lands, Cay­man Is­lands, Isle of Man, St Kitts & Ne­vis and San Marino. As many as 15 TIEAs are in force and such pacts are be­ing ne­go­ti­ated with 28 coun­tries and ju­ris­dic­tions.

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