Indian regulator homes in on round-tripping

 

Yachts in a tax haven quayside

Yachts in a tax haven quayside

Round tripping: routing money back into the country as foreign funds using investment vehicles, such as stocks and bonds, across jurisdictions  

The Securities and Exchange Board of India is reportedly looking into a money movement scheme which allows investors to bring money back into India without paying the correct amount of tax.

According to this report on moneycontrol.com, SEBI is “looking at the possible use of Protected Cell Companies (PCCs) from Mauritius, British Virgin Islands, Cayman Islands and Seychelles for alleged round-tripping of funds back into the capital market in the form of foreign institutional investor and overseas venture capital money.”

Several entities are under investigation, including some well known companies and industrialists, although no names have been confirmed. It also looks like bank employees may have been acting without the knowledge of the institutions to arrange ’round-trips’ for clients: “..while the banks may not have been directly involved, their employees may have dealt with the clients without keeping the banks in the loop.”

The problem is not jsut limited to India, unsurprisingly. A study carried out by professors at Massachusetts Institute of Technology (MIT) int he US revealed that the practice is costing the US billions in unpaid revenue.

 

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