Where is the black money of rich and corrupt Indians? It is not all in the Swiss Banks, though you may have grown up hearing about them
Where is the black money of rich and corrupt Indians? It is not all in the Swiss Banks, though you may have grown up hearing about them as the prime destination where rich and corrupt Indians park their black money. A new research paper for the Nation Bureau of Economic Research of the United States has revealed some surprising facts about global tax havens. Consider these: The research paper says that around 10% of world GDP is held in tax havens globally. But this average “masks a great deal of heterogeneity -from a few percent of GDP in Scandinavia, to about 15% in Continental Europe, and 60% in Gulf countries and some Latin American economies.”
According to the research paper, India is among the countries that do not own much wealth in Switzerland relative to the size of their economy. “The group of countries that do not own much wealth in Switzerland relative to the size of their economy is diverse too, encompassing high-tax Scandinavian countries (Denmark, Norway, Sweden), low-tax OECD countries (Japan and South Korea), democracies (India), alongside autocracies (China),” it said.
Between 2007 and 2015, the offshore wealth held by Indians increased around 90% up to Rs $62.9 billion, which is about 3.1% of India’s GDP in 2015. The research busts the myth that Switzerland is the preferred destination for Indians to park their wealth. In fact, over 53% of Indians’ offshore wealth is parked in Asian tax havens like Hong Kong, Macau, Singapore, Bahrain and Malaysia. Banks in Switzerland now hold around 31% of Indians’ wealth. In 2007, it was 58%.
The researchers were able to make these trends while analysing the data released for the first time by Basel-based Bank of International Settlement on bilateral foreign holdings. BIS has collected these data for decades. “But until 2016 the BIS had only disclosed statistics aggregated at the country level (such as the total amount of foreign-owned bank deposits in Hong Kong) rather than at the bilateral level (such as the amount of bank deposits owned by Indian residents in Hong Kong).”
Most offshore centers had authorized the BIS to disseminate bilateral data in 2016.
The new data was analysed for the NBER paper by economist Gabriel Zucman of UCLA and his colleagues Annette Alstads of the Norwegian University of Life Sciences and Niels Johannesen of the University of Copenhagen. They calculated that total offshore wealth in the world was $8.6 trillion.