MONEY MATTERS

Tax avoidance at home is the strongest reason for individuals and corporations to open and operate accounts in countries like Switzerland, Bermuda, Bahamas and Cayman Islands. In several countries tax evasion poses a major threat to their public finance. More recently, money laundering, as a conduit for narcotics and terrorism, has occupied the centre stage. At all international forums such as the G20, member countries pledged to bring pressure on the tax havens to become more transparent. It is a herculean task for countries like India to get the information they want from these tax havens. Money that has been deposited in tax havens might have escaped the tax net in India but accepting such money need not be an illegal activity in those countries. Besides, a large number of non-resident Indians do not come under the Indian tax law or other jurisdiction. The experience of the U.S. government in unearthing details of bank accounts of alleged tax evaders is worth noting. Last year, Switzerland’s second largest bank UBS agreed to deliver details of 4,450 American authorities of tax violation. In return, the U.S. government agreed to withdraw the suit against the bank and stopped demanding the names of 52,000 Americans accused of hiding in offshore accounts.

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