India Sending Tax Officers To Offshore Centres
India — which signed a pact with Bermuda in 2010 to facilitate the exhange of information between the two countries on tax evasion — is planning a major crackdown on citizens who abuse offshore financial centres.
New Delhi yesterday [Mar. 19] announced tax officers will be posted in offshore financial centres to spot suspicious transactions by Indian residents who use these jurisdictions to escape tax and launder money. India’s Income Tax department has picked 22 senior officers for the job.
The decision coincides with the Indian government’s proposal to make it mandatory for tax payers to declare their offshore bank accounts and other assets held overseas. For this a separate column in tax return forms will be introduced.
Once this proposal, now a part of a pending Finance Bill in the country’s Parliament, becomes law, prosecution proceedings can be initiated against tax payers for suppressing such information. They will be tried in a special court to be set up exclusively for hearing income tax related cases.
The special assignments will be given to officers in the rank of joint commissioners and above. They will focus on facilitating the flow of intelligence on transactions involving Indian citizens. India is negotiating with 22 countries for entering into tax information agreements. At present it has information-sharing pacts with five jurisdictions including Bermuda.
In February India’s Central Bureau of Investigation announced it would send judicial requests to Bermuda and the United Kingdom seeking details of money trail in a widening political corruption case in which former Telecom Minister Dayanidhi Maran is an accused.
The CBI has alleged the former Cabinet Minister received $118 million as kickbacks from the Indian-Malaysian telecom company Aircel, sources told the Press Trust of India.
These allegations have been denied by Mr. Maran.
Tracking the money trail, the CBI probe has reached the shores of Bermuda and the United Kingdom from where the money was routed to reach Indian companies, agency sources said.
The Indian tax officers who will be posted abroad will have to use their contacts and official channels to fish out information whenever their colleagues ask for details on transactions that draw their attention. Their expenses for gathering information will be met out of a secret fund of the tax department.
Out of the 22 chosen for the assignment, the government has sanctioned the postings of eight officers. They will take charge within the next couple of months.
In all likelihood, this network of officers placed abroad will become wider as the government intensifies its drive to identify the undisclosed overseas bank accounts of Indians.
The government is finally implementing plans that were drawn up long before the recent measures. According to a report dated April 28, 2010, India’s tax department had plans to create divisions and post officers at the Indian missions in the US, the UK, the Netherlands, Japan, Cyprus, Germany, France and the UAE for raising the vigil on evaders and greater exchange of information.
Since the government is now in possession of more information on residents holding accounts in Swiss and tax haven banks, it is stepping up efforts to chase funds parked abroad. According to a 2006 report by Swiss Banking Association, more than $1,400 billion Swiss bank deposits belong to Indian nationals. The treaty between India and Switzerland became operational on 1 January 2012.
Under the exchange of information treaties, the countries are required to share information only if the other country has reasonable ground to believe that there has been a tax offence. They are not required to respond to general inquiries.
Under the recently concluded agreement between India and Cayman Islands, while requesting for such information, India is required to demonstrate the foreseeable relevance of this information by giving the name of the person under investigation, nature of investigation as well as statement to the effect that it has pursued all means available within its territory to collect this information.
India has signed Tax Information Exchange Agreements [TIEA] with Bermuda, Bahamas, Isle of Man, British Virgin Islands and Cayman Islands.
Saw this one coming oceans away…just the tip of the iceberg!
The beat goes on!