Pandora Papers: Multi-Agency Group investigation begins

New Delhi: The Multi-Agency Group (MAG) on Pandora Papers has begun its preliminary investigation of entities and persons named in Pandora Papers and held its first meeting last week. The meeting of MAG was chaired by the Central Board of Direct Taxes Chairman JB Mohapatra.

Officials of Enforcement Director (ED), Reserve Bank of India (RBI) and Financial Intelligence Unit (FIU) attended the meeting.

Sources told ANI that MAG, in its meeting, discussed the information reported by the International Consortium of International Journalists (ICIJ) on October 3, 2021, where it was claimed to be a 2.94 terabyte (TB) data trove that exposes the offshore secrets of wealthy elites from more than 200 countries and territories.

According to the source present in the meeting, MAG discussed the leak of Pandora Papers reported by ICIJ. "Only a few of the 380 Indian names and entities have appeared in the media so far. MAG will fast track its investigation once the rest of the names of Indian entities are released by ICIJ," said sources.

"It was decided in the meeting that the MAG will seek information from countries concerned on Indian entities named in Pandora Papers through Automatic Exchange of Information (AEOI). Through AEIO tax authorities match the incomes earned or account held abroad, with that declared in their tax returns so as to detect instances, if any, of tax evasion," sources added.

India has activated the AEOI relationship for receiving information from 96 countries including the British Virgin Islands and the Bahamas where Indian entities have invested their wealth.

Sources further told that the MAG also have a platform of Organisation for Economic Co-operation and Development (OECD) where, through Spontaneous Exchange Information, India can ask for information from countries concerned.

"Tax authorities also have the provision of common reporting standard (CRS), where CRS requires financial institutions to identify the tax residency of all the customers, and in most cases report information on customers who are tax residents outside of the country/jurisdiction where they hold their accounts," they said.

As per the ICIJ, as many as 380 Indians are on the list of the global elite who has been exposed for ring-fencing their wealth through the shadowy financial transaction and using offshore tax havens to hide assets worth millions of dollars.

The investigation is based on a leak of confidential records of 14 offshore service providers that give professional services to wealthy individuals and corporations seeking to incorporate shell companies, trusts, foundations and other entities in low or no-tax jurisdictions.

The sources said that MAG will take appropriate action as per law. Earlier in a statement, CBDT had said that government will also proactively engage with foreign jurisdictions for obtaining information in respect of relevant taxpayers/entities.

The Government of India is also part of an Inter-Governmental Group that ensures collaboration and experience sharing to effectively address tax risks associated with such leaks.

It may be noted that following earlier similar leaks in the form of ICIJ, HSBC, Panama Papers and Paradise Papers, the government had already enacted the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 with an aim to curb black money, or undisclosed foreign assets and income by imposing suitable tax and penalty on such income.

Undisclosed credits of Rs 20,352 crore approximately (status as on 15.09.2021) have been detected in the investigations carried out in the Panama and Paradise Papers.