Pandora Papers Exposé: The Pandora Papers recent leak reveals potential tax evasion by 380 rich, famous Indians.
- The Indian Express has so far verified and corroborated documents related to about 60 prominent individuals and companies.
About Pandora Papers:
- The Pandora Papers investigation is the world’s largest-ever journalistic collaboration, involving more than 600 journalists from 150 media outlets in 117 countries.
- 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.
- They provide a rare window into the hidden world of offshore finance, casting light on the financial secrets of some of the world’s richest people.
- The Pandora Papers are 11.9 million leaked files from 14 global corporate firms which set up about 29,000 off-the-shelf companies and private trusts in not just obscure tax jurisdictions but also countries such as Singapore, New Zealand, and the United States, for clients across the world.
- These documents relate to the ultimate ownership of assets ‘settled’ (or placed) in private offshore trusts and the investments including cash, shareholding, and real estate properties, held by the offshore entities.
Pandora Paper Expose:
- The Pandora Paper exposes how the rich and powerful individuals and entities on the radar of the Pandora investigation have set multi-layered trusts for the purposes of real estate.
- The purposes of the layered structured trusts are divided into two objectives:
- Tax Avoidance: To hide from tax authorities by hiding the real identities behind the offshore companies,
- Tax Evasion: To safeguard investments such as real estate, aircraft, cash, art, shareholdings, yachts, etc from law enforcers and creditors.
How is Pandora different from the Panama Papers and Paradise Papers?
- The Panama and Paradise Papers dealt largely with offshore entities set up by individuals and corporates respectively.
- The Pandora Papers investigation reveals how businesses have created a new normal after countries have been forced to tighten the screws on such offshore entities with rising concerns of money laundering, terrorism funding, and tax evasion.
What is a Trust in the case of Pandora Papers?
- A Trust can be defined as a fiduciary arrangement where a third party is referred to as the trustee.
- A Trust holds assets on behalf of individuals or organizations that are to benefit from it.
- These trusts aid large businesses or wealthy families to hold their assets and investments such as real estate, shareholding, cash, etc.
- A trust comprises following three key parties:
- First one is the Settlor who sets up, creates, or authors a trust.
- The second one is the Trustee who holds the assets for the benefit of a set of people named by the ‘settlor’.
- The third ones are the Beneficiaries to whom the benefits of the assets are bequeathed.
- Though a Trust is not a separate legal entity, the legal aspect of it comes from the Trustee.
- At times, the ‘settlor’ appoints a ‘protector’, who has the powers to supervise the trustee, and even remove the trustee and appoint a new one.
Is setting up a trust in India or one offshore/ outside the country, illegal?
- The Indian Trusts Act, 1882, gives legal basis to the concept of trusts.
- While Indian laws do not see trusts as a legal person/ entity, they do recognise the trust as an obligation of the trustee to manage and use the assets settled in the trust for the benefit of ‘beneficiaries’.
- India also recognizes offshore trusts i.e., trusts set up in other tax jurisdictions.