www.thesuniljain.com

From Dubai to Singapore, the noose tightens PDF Print E-mail
Friday, 19 January 2018 04:10
AddThis Social Bookmark Button

A 5% VAT in one means all deals will leave paper trails &, in the other, bank account details will be passed on to India

 

It is not clear how much, if any, of the bump up in direct tax collections—they rose 18% in April-December versus the budgeted 15.7% for the full year—is due to the fact that black money, tripped up during demonetisation, is having to pay taxes. But, there can be little doubt the noose is tightening around those with untaxed incomes across the world. From January 1, thanks to intense pressure from the EU which blacklisted it as a tax haven, the UAE has started levying a modest 5% VAT. While the tax is, in itself, not that high, what is worrying for those smuggling out of that country, or routing money through it, is that a VAT means that all firms operating out of that tax jurisdiction now have to maintain proper books of accounts and that each transaction will leave a paper trail. It is then, just a matter of time when, after a request from the taxman in India, such information will be shared.

Equally worrying, from the point of view of those with black money stashed overseas, the Singapore revenue authorities have started asking banks in that country to provide them with details of all Indian accounts and will pass them on to the taxman here. This includes beneficiary accounts as well. In other words, financial transactions of all Indian firms in Singapore will soon be traceable under the information sharing agreements signed with that country. Such information has already started coming in from countries like the US and Switzerland.

Back home, once it stabilises, GST will give the taxman a trove of information of goods and services being bought and sold and, with some analyses, of the incomes being generated out of them—that is why, apart from more indirect taxes, the belief is that GST will also boost income tax compliance considerably. And even if those with black money in cash brought it back into bank accounts after demonetisation and managed to escape prosecution—so far—the rise in corporate taxes in April-November suggests they are at least paying higher corporate taxes on this. Now that the cash component of black money held inside the country is traceable since it has come into bank accounts, the government needs to start working on quickening the pace of implementation of the benami property act—this has been on the books since 1988 but it is only now that it is being implemented in any form of seriousness.

The best way to do this, it has said in the past, is to start linking each property in the country with an Aadhaar number and, over a period of time, any property that is not linked to an Aadhaar whose owner has the means to own the property is clearly a benaami one. Doing so, of course, is easier said than done since this falls under the purview of the state governments. But with 19 states, including prosperous ones like Gujarat and Maharashtra, under the control of the ruling NDA, a start can be made in these states. And if the next meeting of the GST Council decides it wants to include real estate under the new law, this will be a big help to the taxman in tracking property-based transactions—the bait for the states has to be that, with a lot more properties now likely to come into the net, their tax base will increase manifold.

 

You are here  : Home Goverment From Dubai to Singapore, the noose tightens
intalk.eu - This website is for sale! - intalk Resources and Information.