The case of Paradise Papers


  • The government has reconstituted a Multi-Agency Group led by the Central Board of Direct Taxes (CBDT) chairman to probe cases relating to the ‘Paradise Papers’ data disclosure.

What are Paradise Papers?

  • Paradise papers is a cache of 13.4 million documents obtained by German newspaper Süddeutsche Zeitung and investigated by the International Consortium of Investigative Journalists (ICIJ) in partnership with The Indian Express, revealing how two firms Bermuda’s Appleby and Singapore’s Asiaciti Trust help the global rich and powerful move their money abroad.
  • The Paradise Papers include almost seven million loan agreements, financial statements, emails, trust deeds and other paperwork over nearly 50 years from Appleby, a prominent offshore law firm with offices in Bermuda and also from Asiacity, a Singapore-based family-owned trust company.
  • The findings have emerged as part of the Paradise Papers released by the US-based International Consortium of Investigative Journalists (ICIJ), which was behind the Panama Papers made public last year.

Information in phases

  • The website of ICIJ suggests that information will be released in phases and structured data connected to the Paradise Papers investigation will be released only in the coming weeks on its Offshore Leaks Database.
  • The Investigation units of the Income Tax Department (ITD) is already on alert to take note of revelations for immediate appropriate action.
  • Finance Ministry said that, “It has been reported that many cases of offshore entities are already under investigation on fast track. As soon as further information surfaces, swift action as per law will follow.”
  • The investigations in cases of Paradise Papers will be monitored through a reconstituted Multi Agency Group (MAG), headed by the Chairman, CBDT, having representatives from CBDT, Enforcement Directorate, Reserve Bank of India and the Financial Intelligence Unit.

Constitution of MAG

  • The MAG was previously constituted in 2016 following the Panama Papers disclosure.
  • A lot of people similarly like panama papers have said that it is legitimate to hold such offshore accounts. Therefore, any wrongdoing will have to be determined only once it is known what is in those accounts.
  • If there is income that has not been disclosed, just holding an account is not illegal.

Why does Paradise Papers matter?

  • Setting up offshore entities for corporate restructuring or expansion in a rapidly globalizing world may not be illegal but it raises a crucial issue: MNCs exploiting loopholes in law to avoid filling in legitimate taxes in their country.
  • Thus, Paradise Papers opens up the door for regulatory bodies to investigate and ascertain the legitimacy of these offshore transactions.
  • Among Appleby’s Indian clients are several prominent corporates and companies which subsequently came under the scrutiny of investigating agencies like the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED).

India’s position

  • Among the 180 countries represented in the data, India ranks 19th in terms of the number of names.
  • 714 Indians are said to be part of the list, however, the government noted that the names of “only a few Indians legal entities as well as individuals.
  • The disclosure comes 18 months after disclosure of Panama papers, which named several prominent Indian politicians, actors, and businessmen as having offshore undisclosed bank accounts.
  • The ICIJ website has not yet released the names and other particulars of all the entities.

Why is it happening?

  • With more and more Indian companies extending their global footprint, India is witnessing more such complex offshore structures designed.
  • It is making it imperative for firms to balance their tax planning and comply with the rules.
  • This also underlines the need for systemic reform, especially the urgency of simplifying India’s taxation laws, at a time when the government has been boasting about the surge in the country’s ranking in the ease of doing business.
  • After the Panama leaks, the government was quick to form a multi-agency group to probe all cases of Indians who had set up such offshore structures and launch prosecutions in some cases.
  • It is appreciated that the government has promptly responded this time by announcing a multi-agency group to probe the Paradise papers.

History of Panama Papers

  • The Panama Papers contained brief particulars of about 426 persons, prima facie, Indians or persons of Indian origin.
  • The Income Tax department conducted enquiries in all 426 cases, inter alia, through making 395 references to 28 foreign jurisdictions.
  • Based on the result of the enquiry obtained, the outcome so far indicates 147 actionable cases and 279 non-actionable cases.
  • Out of the 147 actionable cases, the CBDT said investigations have led to the detection of undisclosed funds worth about 792 crore, so far. Searches have been conducted in 35 cases and surveys in 11 cases. In other cases, the persons have been confronted with the evidences. In five cases, criminal prosecution complaints have been filed.
  • In seven cases, notices were sent under Section 10 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015, the CBDT said, adding that further investigation was under way.

The International Consortium of Investigative Journalists

  • The International Consortium of Investigative Journalists is a global network of more than 200 investigative journalists in 70 countrieswho collaborate on in-depth investigative stories.
  • Founded in 1997 by the respected American journalist Chuck Lewis, ICIJ was launched as a project of the Centre for Public Integrity, focusing on issues that do not stop at national frontiers: cross-border crime, corruption, and the accountability of power.
  • In February 2017, ICIJ was spun off to become a fully independent news organization with the goal of extending our global reach and impact even farther. In July 2017, ICIJ was granted its own 501(c)(3) nonprofit status from U.S. tax authorities.
  • ICIJ is governed by three committees – a traditional board of directors with a fiduciary role; an Advisory Committee made of supporters and experienced investigative journalists; and an ICIJ Network Committee.
  • The aim is to bring journalists from different countries together in teams – eliminating rivalry and promoting collaboration. Together, we aim to be the world’s best cross-border investigative team.
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