Five FMs urge India to join ‘beneficial ownership’ move | business | Hindustan Times
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Five FMs urge India to join ‘beneficial ownership’ move

business Updated: Apr 15, 2016 23:24 IST
Prasun Sonwalkar
European Union

Finance ministers of five leading European countries have written to India and other G20 countries for coordinated action and more transparency after the Panama Papers leaks, particularly on “beneficial ownership” which is akin to ‘benami’ transactions in India.

The finance ministers of Britain, Germany, Italy, Spain and France on Friday signed an agreement — described as groundbreaking — to automatically share information on ultimate owners of shell and other companies, making it more difficult for firms to dodge tax or funnel corrupt funds.

They called for progress towards a fully global exchange of beneficial ownership information to remove “the veil of secrecy under which criminals operate”.

The letter to finance minister Arun Jaitley and his G20 counterparts says: “Criminals continue to find ways to exploit the cracks in the current system; setting up complex structures in various and often multiple locations to hide their activities…As with tax evasion, this needs a global response.”

The offshore accounts of Indian citizens are expected to be substantially curtailed from 2017 as India has committed itself to “common reporting standards” on automatic exchange of tax information with Britain and several countries.

India’s participation in global efforts to clamp down on tax evasion was reiterated during the UK-India Economic and Financial Dialogue here in January between Jaitley and chancellor George Osborne.

A joint statement after the dialogue said the two sides shared a “common commitment to address cross-border tax evasion and avoidance” and had committed themselves to the “Common Reporting Standards (CRS) on Automatic Exchange of Tax Information (AEoI) and will begin exchange in 2017”.

India joined the global effort during a meeting of OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes in Berlin in October 2014.

The letter to G20 ministers suggests the OECD, alongside the Financial Action Task Force, should take a lead role in developing a new single global standard for such exchanges and for interlinking registers.

Osborne said: “Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefitting from corruption.

“No single country can tackle international tax evasion alone – and Britain should never fool itself into thinking that it can do this by itself.”