Tax adventurism will prove extremely costly, says FM Arun Jaitley

NEW DELHI: Finance minister Arun Jaitley has said because of global efforts transparency was increasing, warning of costly consequences for anyone trying to evade taxes, referring to the Panama Papers that showed possible tax evasion through offshore entities by people across countries.

“This is a stern reminder to all of us that with the G20 initiatives, FATCA (Foreign Account Tax Compliance Act) and bilateral transactions in place with effect from 2017, the world is going to be a far more transparent institution and, therefore, this kind of an adventurism will prove to be extremely costly for those who have indulged in it,” Jaitley said, addressing the annual session of industry body CII.

The NDA government has already passed a strict law to discourage foreign black money, prescribing imprisonment of up to 10 years and effective confiscation of undisclosed asset.

The law gave past offenders one last chance to come clean through one-time compliance window of three months that ended on September 2015.

“I had come in for some adverse comment including by some of my friends here when in 2015 Budget we had announced a strong penal law against illegal assets abroad. At that stage I had said that those who committed this mistakes in the past are getting one last opportunity with a compliance window in place,” FM said indicating how things could get difficult for those who have not come clean with information inflow increasing. “The compliance window operated, many availed of it but probably some didn’t,” he said. During the period the government received 644 declarations involving undisclosed foreign assets worth Rs 4,164 crore Those wanting to come clean were required to pay 30% tax and 30% penalty.

FATCA was enacted by the US in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act to combat tax evasion by US nationals holding investments in offshore accounts.