Recently, the Indian and Swiss authorities have sent notices to people that they suspect of tax evasion. These notices were sent to certain tax haven trusts as well as to individuals that the government suspects evaded taxes in India and then moved abroad.
The Trusts Suspected
The trusts in question are set up in tax havens overseas that are part of a maze of complex entities. The involvement of both Indian and Swiss governments comes from the fact that the trusts involve Indian individuals and the funds are placed in banks based in Switzerland, with the funds potentially being illicit.
It is nothing new for companies and individuals around the world, including in India, to use trusts in tax havens like the British Virgin Islands, Panama, and the Cayman Islands to evade taxes.
Some of the trusts based on the Cayman Islands that were in the notices are The Agarwal Family Trust, The Dinod Trust, The P. Devi Trust, and The P. Devi Children’s Trust. Notices were also issued to Devi Limited based on the Cayman Islands and Aadhi Enterprises Pvt Limited in India, among others.
The Individuals Suspected
The individuals who received the notices are suspected of moving abroad after they evaded paying taxes in India. This situation also involves banks based in Switzerland, hence the involvement of both countries. The Swiss authorities are sharing banking details of these individuals with the relevant Indian authorities.
Some of the prominent Indian businessmen named in the notices include Gautam Khaitan, Atul Pung, Satish Kalra, Dullabhbhai Kunverji Vaghela, Kumar Khanna, Balwantkumar Dullababhai Vaghela, and Revaben Dullabhai Kunverji Vaghela.
Some of the people named in the published notices have passed away since their actions of tax evasion. In those cases, the heirs of those individuals were asked to take responsibility and respond to the given notices. Some of the names were also mentioned in the Panama Papers and other similar lists, and the individuals in question have denied wrongdoing.
The notices were published over the course of a month in the federal gazette in Switzerland, the legally approved method of issuing them. The notices encourage the individuals and trusts to appoint nominees if they want to appeal. This would disallow the Swiss authorities from sharing their banking details with the Indian government, assuming a successful appeal.
The various entities mentioned in the notices have slightly different situations, but all involve suspected tax evasion. Authorities suspect that politicians use some of these named entities to hide illicit wealth. Examples of illicit wealth would include instruments connected to financial services, jewelry and gems, and real estate.
Why the Notices Are Issued Now
Given that some of the named individuals have already passed away, the publishing of these notices is not necessarily timely in all cases. The notices are the result of India’s request for “administrative assistance” related to the probes for each individual or trust.
Keep in mind that last year, Switzerland and India began a framework for the automatic exchange of information. The first sharing of data occurred in September 2019, with annual sharing to follow each September. This request for administrative assistance is separate from that information exchange framework.
The cut-off year in that automatic exchange is 2018, and some of the accounts that are being issued notices may have closed prior to this. The administrative assistance also requires submitting prima facie evidence indicating wrongdoing.
What Comes Next
Recent months saw the issuance of more than 100 of these notices. Traditionally, issuing notices is the first step before Swiss authorities share the relevant information with the authorities in other countries. The notices only include the names of individuals along with their date of birth. In the case of companies and trusts, the date of incorporation is instead included.
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