What are the Paradise Papers?
The Paradise Papers is a set of 13.4 million confidential documents relating to offshore investment that were leaked to a German newspaper Süddeutsche Zeitung. The documents originate from the offshore law firm Appleby, the corporate services providers Estera and Asiaciti Trust, and business registries in 19 tax jurisdictions.
Who is being exposed?
Among the 180 countries represented in the data, India ranks 19th. There are 714 Indians in the paradise papers including the names of several political leaders. Among them are former Minister of Corporate Affairs Sachin Pilot, former Chief Minister of Rajasthan Ashok Gehlot, former Minister of Science and Technology Vayalar Ravi’s son, the Minister of State for Civil Aviation Jayant Sinha, the son of former Minister of Environment, Forest and Climate Change Veerappa Moily, Rajya Sabha MP Ravindra Kishore Sinha, Bollywood actor Amitabh Bachchan, and Andhra Pradesh Opposition Leader Y. S. Jaganmohan Reddy. Companies listed in the papers are Apollo Tyres, the Essel Group, D S Construction, Reliance Group, Emaar MGF, GMR Group, Havells, Hinduja Group, the Hiranandani Group, Jindal Steel, the Sun Group and Videocon.
Where do the Paradise Papers come from?
There are more than 1.4 TB of data, containing about 13.4 million documents. Some 6.8 million come from the offshore legal service provider Appleby and corporate services provider Estera. The two operated together under the Appleby name until Estera became independent in 2016. Another six million documents come from corporate registries in some 19 jurisdictions, mostly in the Caribbean. A smaller amount comes from the Singapore-based international trust and corporate services provider, Asiaciti Trust. The leaked data covers seven decades, from 1950 to 2016.
What is Appleby?
Appleby is one of the world’s largest offshore firms, advising companies, financial institutions, and high-net-worth individuals. Headquartered in Bermuda but operating in 10 offices across key offshore jurisdictions including the British Virgin Islands, the Cayman Islands, Isle of Man, Jersey, Guernsey, Mauritius, Seychelles, Hong Kong and Shanghai. The firm has about 470 staff, 200 lawyers and 60 partners. The company has many clients in India though it has no offices in the country.
Who leaked the Paradise Papers?
German newspaper Süddeutsche Zeitung obtained the original material and was the stepping off point for this investigation. As with the Panama Papers, the International Consortium of Investigative Journalists (ICIJ), a global network of investigative journalists, was called in to work on the project.
Why is it in the public interest?
The investigation is in the public interest because data leaks from the world of offshore have repeatedly exposed wrongdoing. The leaks have led to hundreds of investigations worldwide, resulting in politicians, ministers and even prime ministers being forced from office.
What is a tax haven?
Tax havens are countries where personal and business taxes are likely to be very low, or even non-existent. As a result, these countries often attract individuals and companies who are seeking to pay less tax than they would at home. Businesses may move their headquarters to a tax haven, or individuals choose to live there for some or all of the year, to qualify for the lower tax regime. Some countries or jurisdictions construct tax legislation with the explicit intention of becoming “havens” for those seeking to avoid tax in their own countries. This gives rise to “tax competition” between nations eager to get businesses to set up within their borders. The term “tax haven” does not only refer to countries with low tax rates. It can also be used to describe regimes where financial information is kept secret. This is where jurisdictions choose not to share financial information relating to businesses and individuals with authorities elsewhere. The Tax Justice Network defines “secrecy jurisdictions” as countries which “use secrecy to attract illicit and illegitimate or abusive financial flows”.
What is the difference between tax avoidance and tax evasion?
Tax avoidance involves companies and people using legal ways and following the rules to reduce their tax bill. In contrast, tax evasion is an offence and involves illegal ways of paying less tax than required. The papers claim major global companies have exploited offshore schemes to avoid tax.
What is government action after paradise paper leak?
The multi-agency group probing the Panama Papers will be reconstituted to monitor a probe and take swift action on Paradise Papers which uncover financial holdings abroad that list a number of Indian entities. Chairman of Central Board of Direct Taxes (CBDT) Sushil Chandra will head the Paradise probe team which will have representatives from CBDT, Enforcement Directorate (ED), Reserve Bank of India and Financial Intelligence Unit (FIU).
(Also read in Hindi another related story on Paradise Papers here)
