Paradise papers: What it means and which Indian names figure in it

An avalanche of data on offshore economic activities of some prominent Indian companies and individuals is out in the public domain.

An avalanche of data on offshore economic activities of some prominent Indian companies and individuals is out in the public domain. Indian Express today published the India chapter of how a Bermuda-based firm Appleby and Singapore’s Asiaciti with 19 tax havens across the world is helping MNCs exploit loopholes in tax laws and evade taxes. In a list of 180 countries, India figures at the 19th spot, with 714 Indians named in it.

So, what are Paradise papers?

German newspaper Süddeutsche Zeitung obtained a massive cache of 13.4 million corporate records through leaks from both the firms. It shared the details with the International Consortium of Investigative Journalists (ICIJ). As a partner of ICIJ, The Indian Express investigated all documents that had an India connection. The documents went through journalistic rigour for 10 months and are out now.

Who are the Indians named on it?

Some prominent Indians who find mention in it are–

Vijay Mallya – Four offshore subsidiaries of United Spirits Limited India, formerly owned by fugitive Vijay Mallaya was used to divert $1.5 billion. Diageo group that bought USL India from Mallya did away with three intermediate subsidiaries, thus waiving off a debt of $ 1.5-billion debt.

Harsh Moiliy, son of former Union Minister Veerappa Moily Harsha Moily’s name figured in the list. Chairman of Fortis-Escorts, Dr Ashok Seth also finds a mention.

Bollywood actor Sanjay Dutt’s wife Dilnashin Sanjay Dutt, popularly known as Manyata’s is also named in it. She held several positions in a Bahamas-registered firm Nasjay Company Limited. However, her spokespersons said that all her holdings were declared in her balance-sheet.

Corporate lobbyist Nira Radia was on the boards of two off-shore companies.

BJP MP Ravindra Kishore Sinha,founder of the private security firm SIS, heads a group which has two offshore companies.

You can access the full list here.

Why should you care about it?

Floating an off-shore is not essentially against laws. India has double-taxation avoidance agreements (DTAAs) with several countries with comparatively lower tax rates. This enables many companies registered in these offshore locations to avail the tax benefits of the host country. However, one needs to focus on the motive of floating such companies and whether they are being fully operated from within India.

What the Paradise papers reveal is that many of these offshore companies are “sham” entities created merely for the purpose of “tax evasion/avoidance, manipulation of the market, money laundering, round tripping (taking untaxed money out of the country through inflated invoices and then bringing it back as investment), parking black money, bribing, etc”.

For the Indian government that has been particularly focused on reigning in tax evaders and black money hoarders, these documents do provide a peek into the way corporates and individuals use offshore entities to evade their country’s tax net.