For Ef­fec­tive Tax In­for­ma­tion Shar­ing

The Economic Times - - The Edit Page -

The in­come-tax depart­ment’s re­ported move to seek sworn dec­la­ra­tions from all those In­di­ans whose names ap­peared in the Panama pa­pers on whether they held undis­closed off­shore ac­counts is ill-con­ceived. Not all for­eign ac­counts and for­eign reg­is­tered com­pa­nies have il­licit money or busi­ness. Such an ex­er­cise could lead to need­less ha­rass­ment of law-abid­ing cit­i­zens, even if tax of­fi­cers have the same pow­ers as are vested in a court un­der the Code of Civil Pro­ce­dure to ex­am­ine a per­son un­der oath. Sure, the mat­ter must be in­ves­ti­gated thor­oughly, and tough action taken to curb tax eva­sion.

Rightly, a multi-agency team is prob­ing the list of In­dian names con­tained in the over11mil­lion files leaked from Panam­abased Mos­sack Fon­seca. To es­tab­lish au­dit trails, the tax depart­ment must push for ef­fec­tive shar­ing of in­for­ma­tion from tax havens such as Bri­tish Vir­gin Is­lands that have re­port­edly reg­is­tered com­pa­nies and trusts — where the de­tails of own­er­ship don’t have to be filed with the au­thor­i­ties. France has placed Panama on the list of un­co­op­er­a­tive ju­ris­dic­tions. In­dia, which does not have a tax in­for­ma­tion and exchange-shar­ing agree­ment with Panama, could fol­low suit if Panama does not share in­for­ma­tion on sus­pected tax evaders. Af­ter all, In­dia had ear­lier black­listed Cyprus for sim­i­lar rea­sons. We must also fol­low Bri­tain and cre­ate a Unique Le­gal En­tity Iden­ti­fier to make com­pa­nies iden­tify their real ben­e­fi­cial own­ers. It would be a step to­wards global co­op­er­a­tion on tax trans­parency. Here too, ef­fec­tive shar­ing of in­for­ma­tion holds the key to trace ben­e­fi­cial own­ers. In­dia’s tax sys­tem also needs an over­haul, to widen the base and lower rates. In­ten­sive train­ing of tax ad­min­is­tra­tors and use of big-data an­a­lyt­ics to track eva­sion brooks no de­lay.

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