Nobody really knows how much money is stashed away: estimates vary from way below to way above $20 trillion<\/em>.\u201d<\/p>\nZucman whose book I have quoted earlier in the column, estimates that around 8% of the global financial wealth or $7.6 trillion is held in tax havens. His estimate is a little lower than other estimates. But each of these estimates is a big number, and that is what matters the most.<\/p>\n
Getting back to the point I was discussing. How good are the chances of India and other countries getting this money back? In the past I have written that given that there are so many tax havens it is next to impossible to get this money back. But after reading Zucman\u2019s book I have revised my opinion, a little.<\/p>\n
While Switzerland was the original tax haven where people who did not want to pay tax in their home countries, took their money to, things have changed since the 1980s. New tax havens like Singapore, the Bahamas, Luxembourg, Hong Kong etc., have emerged over the years.<\/p>\n
As Zucman writes: \u201cIn all these tax havens, private bankers do the same things as in Geneva: they hold stock and bond portfolios for their foreign customers, collect dividends and interest, provide investment advice as well as other services, such as the possibility of having a current account that earns little or nothing. And, thanks to the limited forms of cooperation with foreign tax authorities, they all offer the same service that is in high demand: the possibility of not paying any taxes on dividends, interest, capital gains, wealth, or inheritances<\/em>.\u201d<\/p>\nAs mentioned earlier the Swiss banks as of spring of 2015, had foreign wealth worth $2.3 trillion. Of this around $1.3 trillion belonged to Europeans. A lot of black money emanating from all over the world has found its way into tax havens other than Switzerland.<\/p>\n
How different are these tax havens from Switzerland? As Zucman writes: \u201cTo view Swiss banks in opposition to the new banking centers [i.e. tax havens] in Asia and the Caribbean doesn\u2019t make much sense. A large number of the banks domiciled in Singapore or in the Cayman Islands are nothing but branches of Swiss establishments that have opened there to attract new customers<\/em>.\u201d<\/p>\nAnd this is one of the well kept secrets of international tax havens\u2014Switzerland is still at the heart of it all. As Zucman writes: \u201cIn the past, Swiss bankers provided all services: carrying out the investment strategy, keeping securities under custody, hiding the true identity of owners by the way of famous numbered accounts. Today only securities custody really remains in their purview. The rest has been moved offsite to other tax havens\u2014Luxembourg, the Virgin Islands, or Panama\u2014all of which function in symbiosis. This is the great organization of international wealth management<\/em>.\u201d<\/p>\nGiven this, India alone cannot deal with the issue. Combined international pressure needs to be applied on Switzerland in order to get anywhere with the idea of bringing black money that has left the shores of the country, back.<\/p>\n
The column originally appeared on the Vivek Kaul Diary<\/a> on April 26, 2016<\/p>\n","protected":false},"excerpt":{"rendered":"An important area of focus of the Narendra Modi government has been trying to get the black money which has left the shores of the country, back to India. Black money is essentially money which has been earned, but which has not been declared for tax purposes. As the finance minister Arun Jaitley said in … <\/p>\n
Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"qubely_global_settings":"","qubely_interactions":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,30,77],"tags":[492,1371,1656,3569,3595],"qubely_featured_image_url":null,"qubely_author":{"display_name":"Vivek Kaul","author_link":"https:\/\/vivekkaul.com\/author\/vivekkaul\/"},"qubely_comment":0,"qubely_category":"Banking<\/a> Equitymaster<\/a> Vivek Kaul's Diary<\/a>","qubely_excerpt":"An important area of focus of the Narendra Modi government has been trying to get the black money which has left the shores of the country, back to India. Black money is essentially money which has been earned, but which has not been declared for tax purposes. As the finance minister Arun Jaitley said in…","jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/4406"}],"collection":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/comments?post=4406"}],"version-history":[{"count":0,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/4406\/revisions"}],"wp:attachment":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/media?parent=4406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/categories?post=4406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/tags?post=4406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}