Friday, April 17, 2009

Tax havens: India getting serious?

The Indian Central Board of Direct Taxes is investigating ways of acting against roundtripping and treaty shopping, capitalizing on concerted attempts worldwide to force greater disclosure on tax havens, Tax News reports.

"In the present climate of opinion among world leaders where greater transparency is demanded of all the tax havens, India is examining its own financial relationships with Mauritius and Cyprus in particular, which together account for 46% of total inward direct investment into India in the last decade. In fact Mauritius overtook the US in this period as the largest direct investor in India."

That last sentence just illustrated how badly markets are distorted by the offshore system, as John Christensen has been remarking this morning on the BBC World Service's Analysis programme.

The Canadian High Commissioner to India acknowledged that while Canadian investment into India over the last ten years was USD 239m according to official statistics, the actual figure, including money routed through the tax havens, was more like USD 10bn, Tax News said.

"We should endorse sharing information and bringing tax havens and non-cooperating jurisdictions under closer scrutiny,” Prime Minister Manmohan Singh said at the G-20 dinner.

We shall watch this with great interest. It looks like a most positive development. All around the world, good sense is breaking out.

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