The International Consortium of Investigative Journalists (ICIJ) on 3rd of April 2016 sent tremors across the world after leaking the offshore holdings of 140 politicians, Public officials and Business men from across the globe. The International Consortium of Investigative Journalists is a worldwide network of more than 190 investigative journalists in more than 65 countries who collaborate on in depth investigative stories.
The ICIJ works on issues such as cross-border crime, corruption, and the accountability of power. Known to be the WikiLeaks of mega rich, Panama leaks uncover the sprawling, secretive industry of offshoring that the world's rich and powerful individuals use to hide assets and to dodge the rules by setting up front companies in far-flung locales. To our surprise the leak incorporates one of the claimed business head honcho of Kashmir alongside the leaders like Prime Ministers of Iceland and Pakistan, the President of Ukraine, the king of Saudi Arabia and few sports and Bollywood celebrities as well. The spilled information gives a tiny bit at a time view inside the offshore world and demonstrates the severe and dim side of how dark cash courses through the worldwide global financial system resulting in money laundering, and tax evasion and how countries are being stripped of their treasures. The leaked records originate from an intense law office situated in Pnama, Mossack Fonseca that has branches in Hong Kong, Miami, Zurich and more than 35 other places around the globe. Mossack Fonseca has largely operated in the shadows. Be that as it may, it has gone under developing investigation as governments have acquired halfway breaks of the company' documents. Tax Havens used by Mossack Fonseca. The firm is one of the world's top creators of Shell companies (shell corporation is corporation without active business operations or significant assets), Corporate structures that can be used to hide ownership of assets.
Is offshoring illegal in India?
Prior to 2004 the government of India did not permit the convertibility of currency which restricted the offshoring by Indian residents. It was in in February 2004, RBI partially liberalized its policy and allowed 25000 dollars per year, that a resident individual can take outside India which could then be used for various purposes like education, medical, buying shares etc. This amount was gradually increased to 250,000 a year. However the guidelines didn't specifically allow the Indian residents to setup the individual entity outside India. On a regular intervals RBI however made it clear that the resident individuals can't set their individual corporation abroad. It was however in 2013 that RBI came up with vehicle of Overseas Direct Investment that allowed Individual residents to have 100% stake in offshore entity or enter into joint venture outside India. Thus resident individuals who had setup these entities prior August 2013 were violating the Foreign Exchange Management Act 1999. The law additionally unequivocally determines Non-Reporting of Offshore Assets as an offense. In panama leaks most of these Individual residents from India (more than 500) have setup these offshore entities either before 2004 or have not reported to government of India. These offshore entities are usually set in what are called as "Tax haven". Tax Havens are those countries or independent area where taxes are levied at a low rate or do have loose structures as far as financial regulations are concerned. So what is next in line? Well now it is in the hands of government of India to investigate the holders of these offshore entities and verify the legality of each entity. Tax evasion , Tax avoidance , Money laundering cases have been previously scrutinized but this is for the first time that such a large scale leak has been put in the public domain. The Panama leaks has already become focal point of media, creating pressure on the government to take some immediate action.