Paranjoy Guha Thakurta is a senior journalist. Till recently, he was the editor of the Economic and Political Weekly. Shinzani Jain is an independent researcher and law graduate from Indian Society Law College, Pune. This book, Thin Dividing Line: India, Mauritius and Global Illicit Financial Flows, looks at the India-Mauritius Double Taxation Avoidance Agreement in the global context of growing illicit financial flows.
Let’s look at 5 astounding facts about the tax havens.
In recent times, the governments of many developed and developing countries have been seeking to discourage the use of tax havens. One of the most talked-about such moves is the Base Erosion and Profit Shifting (BEPS) initiative of the Organization for Economic Cooperation and Development (OECD). The OECD is a grouping of some of the richest countries in the world.They also stated that there was ‘no economic justification’ for tax havens’ existence, as they diminished the power of governments to collect taxes.The Tax Free Tour, a documentary by Marije Meerman, that covers useful ground, begins by detailing the round-tripping of funds carried out by multinational companies such as Apple. The figures are startling: James S. Henry is interviewed in the film about the details of Apple’s evasion of taxes, and he claims that it sells 20 million iPads a year for about $500 each (which comes to about $10 billion) while paying Chinese labourers $800 million to make these products.
It is also common knowledge that Mauritius hosts several distinguished lawyers and accountants from India itself who help set up shell companies and hide the trail of beneficial ownership through processes known as ‘layering’ and round-tripping, wherein illicit funds are transmitted through multiple tax havens and ultimately the black money thus gets ‘laundered’ white.
On 2 October 2013, the Federal Bureau of Investigation (FBI) of the United States had arrested Ulbricht, who went by the moniker Dread Pirate Roberts. He was the elusive creator and proprietor of a huge illegal online market Silk Road. Ulbricht was a small part of a much larger network of a shadow economy. On the other hand, take the case of Jack Ma, said to be one of the richest men in the world and his brainchild, the Alibaba corporate empire. In May 2016, the net worth of the Alibaba group was $23.3 billion. His corporate conglomerate was able to become gigantic thanks to the ‘ease of doing business’ out of the Cayman Islands, a 264-sq. km British overseas territory comprising three islands located in the western Caribbean Sea south of Cuba.