The Panama Papers are a leaked set of 11.5 million confidential documents that provide detailed information about more than 214,000 offshore companies listed by the Panamanian corporate service provider Mossack Fonseca that includes the identities of shareholders and directors of the companies. The documents show the myriad ways in which the rich can exploit secretive offshore tax regimes. The list also contains 500 people from India which has raised serious debate about the issues relating to money laundering.
Mossack Fonseca is a Panamanian law firm that helps its clients to create Benami businesses, shareholders, directors etc concealing the original identity of the person involved. More than 11 million documents from the secret files, known for its factory-like production of offshore companies for its worldwide clientele of the well-heeled. These records reveal a list of individuals who have paid the firm — and bought the benefits of the secretive, lax regulatory system in which it operates — to set up offshore entities in tax havens around the world.
With such incidents, Offenders under Indian law are violating income tax and money laundering act which demands serious prosecution under appropriate legal framework. The Benami transaction act which is of Indian origin does have its jurisdiction beyond Indian borders, this makes the law literally void making the offenders walk free and commit crimes without any restrictions.
The government of India had launched what is known as Disclosure scheme under which all the black money offenders were given a Compliance window period to declare all undeclared assets within the fixed time frame and pay required taxes with minimum penalty.
However beyond the fixed time period all non complaint offenders under disclosure scheme will be brought under Black money act which demands legal prosecution, hefty penalty, and even prison.
To prevent such practises India along with G20 have come along to sign an initiative known as Base erosion and profit sharing. This will make the sharing of information’s regarding taxes and black money more easy and dynamic. India is effectively taking steps to implement this initiative which makes the process of stashing unaccounted money difficult.
Under statement of exports, over invoicing of imports, bribery, etc account the most sought after sources for generation of Black money.
The release of Panama paper is slated to create huge uproar in civil society and in parliament of many countries. Government of India has already ordered enquiry against this backdrop. However the need of the hour is to expedite such cases of money laundering through establishing of special courts and punishing the offenders so that it create an effective deterrence to repeat/commit such crimes.
Click here and search for Spotlight/ News Analysis dated 6th of April 2016