GS III (Economics) (Hattrick)
What are Panama & Bahamas papers? What is the connection with India? Add a note on tax heavens.
RAHUL JAIN wrote the best answer for this question and got a score of 5/10. The answer is being reproduced below for everyone’s convenience. Of course these answers can always be improved. (Best answer of a particular only involves those given on that day, later answers may not have been checked)
Tax havens are those countries which have very low taxation rates sometimes coupled with secrecy w.r.t financial transactions,account holders etc. under their jurisdiction. On this account they attract a large no of foreign companies as well as huge amount of capital as well.
Countries like Mauritius,Panama,Switzerland are some of the major tax havens of the world.
Panama papers refer to the documents recently surfaced in Panama showing the wealth(mostly unaccounted for) of prominent personalities stashed in the banks of Panama.
Major Indian industrialists, celebrities too figure in them.
IMPACT ON INDIA:
1. Majority of this money in laundered.
2. This promotes the problem of Base Erosion and Profit Shifting(Apple v/s EU case)
3. Creation of a parallel black economy since this money comes back in the form of FDI,FII thus destabilizing the economy.
4. Robs the state of its rightful share of taxation
5. Raise the question on the taxation laws.
6. Deterioation of bilateral relation.
1. Strengthening of Financial Action Task Force.
2. Synergy and information sharing at diplomatic levels and tax authorities.
3. Better implementation of laws(PMLA act) and powers to agencies like ED which probes such cases.
4. Regulators like SEBI should also be empowered to deal with black money.