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| What is International Consortium of Investigative Journalists? |
- It is n international coalition of media outlets.
- A non-profit organisation based in Washington.
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| Why is it in news? |
- On April 3, 2016 it published an extensive investigation into offshore financial dealings of the rich and famous, based on a vast trove of documents provided by an anonymous source.
- The cache of 11.5 million records detailed the offshore holdings of a dozen current and former world leaders, as well as businessmen, criminals, celebrities and sports stars.
- In India, The Indian Express was part of the investigation and that many Indian industrialists and celebrities, including actors Amitabh Bachchan and Aishwarya Rai, DLF owner K.P. Singh and Vinod Adani (Gautam Adani’s elder brother), are named in the documents.
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| What are its political implications? |
- The fallout has already begun, with the resignation of one Prime(of Iceland), and a shadow of doubt on the political leadership in countries such as Russia and China.
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| What is the extent of tax avoidance problem in India? |
- Today, it is perfectly legal in many countries to park money in various kinds of shadowy companies in tax havens. This holds true in India as well, where a lack of clarity persists about the legality of buying offshore companies.
- The lack of clarity exists despite the Reserve Bank of India’s guidelines on offshore remittances and investments since 2004. While the guidelines, such as those of the Liberalised Remittance Scheme, are specific to remittances utilised by residents to service various overseas requirements such as medical treatment and education, they have been modified over time to permit the setting up of 100 per cent subsidiaries and joint ventures within the limit of $250,000 a year.
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| What should be done to solve the problem? |
- A global tax avoidance problem requires a coordinated response.
- There is an urgent need for much more transparency in the movement of global finance capital.
- The NDA government has passed the Undisclosed Foreign Income and Assets (Imposition of Tax) Act, 2015 and provided a one-time compliance window to declare foreign assets and income. So far, these steps have yielded little by way of repatriation of transferred assets.
- The problem of black money stashed overseas has to be dealt with both at the multilateral level, through tightened capital flow norms, and domestically, through a zero tolerance approach to illegal transfers.
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