‘Panama Papers turmoil reaches the Bachchan house’
Aishwarya Rai Bachchan, a prominent Bollywood actress, has been summoned by the Enforcement Directorate today.
The summon is in relation to the name of Aishwarya Rai Bachchan appearing in the Panama Papers.
The Panama Papers were leaked in 2016 and showed the ugly side of the India’s richest people. The papers brought forth the alleged use of tax havens by almost 400 Indian personalities over the years in order to dupe the government of their tax earnings.
Aishwarya Rai was summoned to appear before the Investigating Officer in Delhi on Monday. Sources said she is being questioned over FEMA (Foreign Exchange Management Act) allegations and not money laundering.
High ranking officials told the sources that Rai had already been sent summons twice before. However, she sought additional time to prepare her case.
Case against the Bachchans
A few companies established in 1993 had Amitabh Bachchan as the director of 4 companies – 3 in the Bahamas and 1 in the Virgin Islands. These companies had a capital base of almost 50,000 USD each.
Documents accessed by an Indian media house of the firm Mossack Fonseca shows that Rai, her parents and her brother were appointed on May 14, 2005, as directors of Amic Partners – with an initial authorised capital of $50,000.
On June 18, 2005, an Amic board resolution changed Rai’s status to shareholder. And on July 5, 2005, internal instructions exchanged between MF staff stated: “One of the shareholders requested to shorten her name from Ms Ashwaria Rai (sic) to Ms A Rai for reasons of confidentiality. The same was mutually agreed and consented by all directors and shareholders.”
In all MF documents linked to Amic, the address columns were left blank.
In 2008, a year after Rai married Abhishekh Bachchan, the process to wind up the company was initiated, show records.
Panama Papers
For the unversed, Panama Papers is an investigation of records from the Panamanian legal firm Mossack Fonseca by the International Consortium of Investigative Journalists where they had named several world leaders and celebrities who had allegedly stocked their wealth in offshore companies and have international accounts.
These offshore companies are situated in various tax havens around the world.
Tax Haven
A tax haven is a country that offers foreign businesses and individuals minimal or no tax liability for their bank deposits in a politically and economically stable environment. They have tax advantages for corporations and for the very wealthy, and obvious potential for misuse in illegal tax avoidance schemes.
Example-Cayman Islands, Panama, Virgin Islands, Switzerland, Mauritius, etc.
But the question that arises is – Are they illegal?
Legality of Tax havens
Tax havens have been referred to as “global black holes” which are used to hide the wealth of the rich and powerful.
In the era of vast globalization, creating offshore shell companies is very easy, and many corporations make use of such tax havens to shift their profits to such tax havens with the sole motive of evading taxes, as seen in the example explained above. Such activity is considered to be illegal, as it erodes the tax base of the country, which is something every responsible resident of that country is responsible for.
Fight against Tax havens
Efforts are being made by international organizations like the Organization for Economic Co-operation and Development (OECD)and even countries to prevent tax evasion through exploitation of international laws.
However, while efforts are being made to curb the practice of Base Erosion and Profit Shifting, it is very difficult to plug all the loopholes as the sovereignty of the nations cannot be tampered with.
As it is the right of every sovereign country to choose whether they want to tax a certain activity or not and if yes, then how much.
Therefore, it is imperative to inculcate a sense of responsibility to pay the taxes and the governments to not get greedy and levy heavy taxes in the name of public welfare.