Multinational companies of global north or western countries are the biggest culprits, who provide the tax havens (a jurisdiction where income tax or other taxes can be hidden with a low rate or without any rate) to hide billions with the help of their efficient networks with the national companies in developing countries (Otusanya, 2012). Approximately USD 200-280 billion has been estimated to be transferred from developing countries through transfer pricing mechanism per year (Bekar, 2005).
It has been estimated that every year between $500 and $800 billion leaves developing countries due to criminal activities, corruption, tax evasion and tax avoidance practices (Baker, 2005).
There are a few examples of MNCs of different countries who are involved in large-scale tax haven and corruption. There have been evidence of US corporations paying money to government officials in developing countries to win business. For instance, US corporations such as Exxon and Northrop paying USD 56.7 million and 30.7 million respectively (Salbu, 1997). IBM, Boeing and 400 other US corporations and 500 companies had made corrupt payment (to government officials) as part of their global business transactions in the past (Salbu, 1997).
Many western banks have been providing shelters for corrupt business people in developing countries to hide their money. It has been found that these western banks even approach foreigners to make arrangements for the transaction by providing them examples of other customers (Baker, 1999). They even provide the contacts of overseas traders for their assistance to facilitate the process.
In addition to this, banking secrecy law has provided the opportunity for large-scale tax havens. For instance, Switzerland, Liechtenstein, the Brahmas, the Cayman Islands and a few other have strict banking laws, which make it a criminal offense for its employees to disclose any customer’s accounts related information. Even in some places, it needs constitutional reform in order to remove the banking secrecy policy (Palan et al. 2010). Keeping this in mind, how the Indian government will negotiate to bring back the black money is a big concern or is it just a matter of TRPs for TV channels. When our excellent negotiation skills could not bring back ‘The great Indian Mallya’, how it would influence in bringing amendments in the banking secrecy policy in those countries, seems not worth considering.
However, we common people or Aam Admi will never lose hope. Black money ayega (will come back)… just the way how Raju Chacha is yet to come back in that popular Bollywood movie.
And one more question, Ayega toh kahan jayega (If it comes where will it be utilised)?
P.S. References can be provided on request.