Tax Justice Network on 2 November 2015 released the Financial Secrecy Index 2015 that ranked jurisdictions according to their secrecy and the scale of their offshore financial activities.
While Switzerland is the most secretive jurisdiction in the world, India, with 42 ranking, is identified as the moderately secretive among 92 countries/jurisdictions surveyed.
Important view of the report
• Though global financial transparency improving few countries like the USA threatening progress.
• While Switzerland (1), Hong Kong (2), the USA (3), Singapore (4) and Cayman (5) are identified as the top secretive jurisdictions in the world, Slovenia (88), Dominica (89), Finland (90), Cook Islands (91) and Montserrat (92) are the most transparent among the surveyed countries.
• An estimated 21 to 32 trillion US dollars of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world.
• Illicit cross-border financial flows have been estimated at 1-1.6 trillion US dollars per year.
• Since the 1970s African countries alone have lost over 1 trillion US dollars in capital flight, while combined external debts are less than 200 billion dollars.
• Financial secrecy hurts citizens of rich and poor countries alike. European countries such as Greece, Italy and Portugal have been brought to their partly knees by decades of tax evasion and state looting via offshore secrecy.
• Competition between jurisdictions to provide secrecy facilities have, particularly since the era of financial globalisation really took off in the 1980s, become a central feature of global financial markets.
• The secrecy world creates a criminogenic hothouse for multiple evils including fraud, tax cheating, escape from financial regulations, embezzlement, insider dealing, bribery, money laundering, and plenty more.
• As a result of parking funds abroad secretly, many poorer countries are losing tax receipts. This is resulting in their reliance on foreign aid handouts.
Report with respect to India
• India is identified as moderately secretive jurisdiction as the index placed the jurisdiction between top 31 and 40 countries/jurisdictions surveyed.
• With a secrecy score of 39.19, India ranked 45 among 92 jurisdictions surveyed.
• India accounts for slightly less than 1.5 per cent of the global market for offshore financial services, making it a large player compared with other secrecy jurisdictions.
• In the Transparency of Beneficial Ownership segment-it was identified that-banking secrecy is partly curtailed, partly discloses or prevents trusts and private foundations and company ownership details are not maintained in official records.
• In the Corporate Transparency Regulation segment-it was identified that- India does not require that company ownership details are publicly available online, company accounts be available on public record and financial reporting by companies to public on country-by-country basis.
• In the Efficiency of Tax and Financial Regulation segment-India requires resident paying agents to tell the domestic tax authorities about payments to non-residents, uses appropriate tools for efficiently analysing tax related information and avoids promoting tax evasion via a tax credit system and partly allows harmful legal vehicles.
• In the International Standards and Cooperation segment-India partly complies with international anti-money laundering standards and participates fully in Automatic Information Exchange.
• India had at least 53 bilateral tax information sharing agreements complying with basic OECD requirement, ratified the five most relevant international treaties relating to financial transparency and partly cooperates with other states on money laundering and other criminal issues.