India Eyes Tax On £350 Billion Cash Hidden Offshore

The Indian government’s bid to unearth black money stashed away in hidden offshore accounts is starting to pay off. The government believes around £350 billion is hidden in undeclared bank accounts and investments outside the country and wants to bring the tax owed on the money back to India. Nine countries have already joined the hunt for the cash by providing financial information about Indian taxpayers. The Indian tax authorities have received information about 25,000 accounts already from New Zealand, Britain, Spain, Sweden, Denmark, Finland, Portugal, Japan and Slovenia. Other countries are also supplying data, but on a lesser scale. They include Australia, Mexico, Italy and Trinidad and Tobago. FATCA bonanza The biggest tax bonanza is expected under a reciprocal tax information exchange under the US Foreign Account Tax Compliance Act (FATCA). Under FATCA, India will tell the US Internal Revenue Service (IRS) about Americans with money in India, while the IRS will reciprocate with financial data about Indians with bank accounts and investments in the US. The government has already set up a special task force with the job of tracking down suspected hidden offshore cash. India’s Central Board of Direct Taxes (CBDT) is collecting the data under the terms of double taxation treaties and tax information exchange agreements with other countries. India has set up a special investigation team to track the information and find the owners of the money. India has also signed up to the Organisation of Economic Cooperation and Development (OECD) tax information exchange network, which includes 34 other countries. Black money “We are receiving huge amounts of data and this is set to explode when FATCA and the OECD tax networks start working to full capacity within the next two years,” said a CBDT spokesman. “We know that this black money is out there and we are determined to track down who owns it and make sure they pay the right amount of tax.” Millions of Indians – termed the diaspora – work as expats before returning home, and many leave much of their earnings offshore to avoid paying tax at home. Many millions more wealthy Indians are suspected of moving their assets out of the country to avoid the tax man. New Zealand has provided much of the data. Although not a tax haven, until recently New Zealand allowed non-residents to set up shell companies, which many Indians took advantage of to hold their financial assets away from the prying eyes of the tax authorities. –