Black money: Swiss info offer may be of little help

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Black money: Swiss info offer may be of little help

NEW DELHI: Even if the purported Swiss promise to give details of Indian account holders in its banks holds true, it would not have revealed much about Indian black money stashed outside the country, especially the money which was moved out in recent years.
Switzerland and New Delhi have both denied reports on Sunday that Switzerland is preparing details of Indians holding secret accounts in its banks, and would hand them over to India.
Even if Swiss authorities were to do so, it would not really capture the depth and spread of the problem, especially what has been happening in recent years. According to several sources and trends available from recent investigations, Switzerland may not any more be among the most preferred tax havens to hide ill-gotten money, or money on which the rich doesn’t want to pay any tax in India.
The latest trend is of preferring tax havens closer home to the classic European tax havens that have captured public imagination. Among the new favourite destinations are Singapore, Dubai, Mauritius, and Hong Kong, say government sources and private individuals aware of such movements.
According to the trend, European tax havens such as Switzerland, Liechtenstein, Andorra, Cayman Islands, Gibraltar, Isle of Man etc have been the traditional favourite of India’s corrupt. When scandals broke out in the 1980s or 1990s, the money movement was mostly through well known tax havens in Europe.
However, in recent times the trend has dramatically shifted, sources say. They point out that there is enough inputs and indication about how several new low tax regimes, or zero tax regimes, mostly in Asia, are now preferred for moving money by those wanting to avoid tax, or to make payments that maybe illegal.
When middlemen wanted to route money into India in the VVIP helicopter deal signed in 2010, it was moved through Tunisia and Mauritius. When investigators looked at possible kickbacks in the Tatra scam they found possible money transfers in Hong Kong, Singapore and London.
One official pointed out that Samoa, Marshall Islands and Vanuatu, all of them near Australia, are among the preferred tax havens of Indians now.
The SIT under Justice MB Shah would primarily be relying on data available with income tax department for probing the extent of black money. However, it may be a miniscule part of the larger black money movement, dependable sources admit.
The Reserve Bank of India on Monday ordered all banks and financial institutions to provide information and documents sought by the SIT. However, even that may not reveal the broader trend, and the deep malaise of black money.