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Panama Papers and its evidentiary value in India


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Tanay Akash, B.A. LL.B.Central University of South Bihar


“There is no compromise when it comes to corruption, you have to fight it”.

The above quote by A.K. Antony most appropriately describes the present issue of Panama papers scandal.  Panama a Central American country between North and South America has been recently in NEWS because of the leaked confidential papers relating to black money, money laundering and tax evasion. As these confidential papers of different countries were discovered in Panama, it is known to be as Panama Paper scandal. It is the most vigorously spread issue in the world scenario today, with affecting almost every country with the leakage of almost 11 million confidential documents of different countries. These papers are said to be leaked by ‘John Doe’ an anonymous character who provided these documents to ‘Bastian Obermayer’ a journalist at ‘Suddutshe Zeituang’ and later kept in the protection of International Consortium of International Journalist(ICIJ).

These documents were leaked from ‘Mossack Fonseca’ a Panama law firm which is alleged to help the Multinational Companies as well as Powerful Individuals from all over the world to get rid of their heavy tax evasions. All this machinery was well channelized and included some of the most powerful personalities from the developed as well as the developing countries.

The clever Mechanism behind the scandal

The working of ‘Mossack Fonseca’ helped HNI/MNCs to register companies in tax havens for round tripping. Suppose there is a company named ‘X’ and is having an annual tax of 100 crores if produced legally. This firm ‘Mossack Fonseca’ through its channelized ‘shell companies’, transfer these as investments in the tax haven countries where it is very easy to form such fake companies and which further returns to these MNCs as profit and the mechanism keeps rotating. This process was kept secret and fooled almost every government of the world in the matters of tax laws.

As far as taxation in India is concerned, India is on the 157th in ease of paying taxes which is the worst. As per law Companies having business in India have to pay legally Capital gains tax + Corporation Tax + Miscellaneous taxes which almost costs 50% of the total profit. The main reason behind this money laundering is to save more profits, flying away from these different taxes and taxation policies of the government. There are also fixed laws i.e. LRS (the maximum amount which a company or an individual can send abroad) and LRS for India is $250,000 but according to the leaked Panama papers this firm used the bunching of annual quota of remittances and in the name of different employees serving as puppets completed the transfers in higher amounts without coming in the eyes of the law of the land.

Supreme Court on Panama Paper and its evidentiary value

As Panama paper scandal included world’s top most leaders including ‘Vladimir Putin’ (former Russian president), Xi Jingping (President of China), Leo Messi (football player), and Benazir Bhutto (former Pakistani president). Apart from these big names famous Indian actors like ‘Amitabh Bachchan’, ‘Aishwarya Rai Bachchan’, K.P. Singh (DLF Head) and Samir Gehlot (Head India Bulls) are some names from India including almost 500 names. Alike our neighbour Pakistan where Prime Minister (Nawaz Sharif) had to resign because of this issue, the apex court in India doesn’t considers it as a proper evidence as it is not mentioned specifically about the tax laundering. As per a report published in Indian Express SC also refused the hearing of Interim plea on participatory- notes. Honourable Justice A.M. Sapre and Justice Ashok Bhushan rather told the Lawyer ‘M.L Sharma’ that the interim plea would be heard by the bench which had issued notice on his main PIL. As per finance minister ‘Mr. Arun Jaitley’ if illegal money will be found in accounts of those who are named in Panama case, then they will also be prosecuted as in the case of HSBC accounts. Thus, until it has not been proved with other subsidiary evidences of money laundry it do not have any proper evidentiary value.

Global and Indian Measures against these activities

As the whole matter is a global issue containing a span of 1977-2015, with the size of 2.6TB Data with 11,500,000 documents, including 214,488 no. of companies and 14,153 no. of clients, the whole world including international organisation got shocked by this mass scandal. At the world level Base Erosion and Profit Shifting (FATF) Concept came into being which prevented the companies from choosing low tax jurisdictions. Also to keep an eye on automatic exchange of Info measures are taken. USA passed foreign account Tax compliance act for these issues. In India, apart from Prevention of Money Laundering Act, General Anti Avoidance Rule (GAAR) came into force. An income declaration scheme from 1st July 2016 to 30th September, 2016 was also launched to declare black money after a penalty of 45% as a medium to give a last chance to the tax looters.


In a nutshell Panama paper leak is not just a simple looking scandal but alike WikiLeaks, this scandal also flashed at the world level the so called corruption and black money in a huge amount with the outcome of some powerful faces behind the white masks. There is a very famous statement that ‘once you have money and fame, the next thing you should expect is scandal and shame’. This can be true with some names present in the Panama papers as it does not contain any other subsidiary evidences that the mechanism of remittance which ‘Mossack Fonseca’ was using is directly related with the given names or someone for the laundry purpose used their name. As per the ICIJ reports the research is still going on and different agencies and investigation units are busy in finding the solution regarding this mystery of Panama papers that whether all the transactions as shown in the paper are as real as it is looking or there are some more reality to come out of these papers. 




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