Opinion Cyprus Confidential: Shining a light on tax evasion

An investigation by The Indian Express, in collaboration with the International Consortium of Investigative Journalists (ICIJ), has further lifted the veil on the vexed problem of tax havens. The “Cyprus Confidential” focused on how the Mediterranean island has become the preferred port of call for the global rich in their quest for a shadowy financial hub to wash dirty money. Over the past decade, a series of investigations — from Offshore Leaks in 2013, HSBC Swiss Leaks in 2015, Panama Papers in 2016, Paradise Papers in 2017, to the Pandora Papers in 2021 — have exposed the complex maze of transactions that show how tax havens help the rich across the world to siphon off wealth and avoid paying taxes in their native countries. The use of tax havens to avoid paying the full quota of taxes is an enormous policy challenge that needs sustained attention. According to the State of Tax Justice 2023, authored by advocacy group Tax Justice Network, countries the world over are on course to losing $4.8 trillion to tax havens over the next 10 years. That’s an amount almost equal to the GDP of Japan — the world’s third largest economy.

Cyprus Confidential, which involved more than 270 journalists from more than 60 media houses in 55 countries and territories, entailed close examination of 3.6 million documents, in English and Greek, sourced from six Cyprus-based financial service providers and a Latvian agency with an office on the island — in India, the Indian Express analysed more than 20,000 documents. The investigation has exposed investments made by prominent Indian businessmen, cashing in on a range of benefits provided by Cyprus: From preferential — and loosely controlled — tax rates to tax exemptions on income and gains of offshore trusts; zero estate duty, no trust registration requirements and the promise of beneficial owner secrecy. The investigations also revealed the names of several prominent Indian investors who became Cypriot nationals under the country’s Golden Passport scheme valid between 2007 and 2020. In it, Cypriot passports were made available in return for an investment of 2 million Euros and gave the new recipients not just the freedom of movement but also a protective shield for their secretive investments in that country.

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From an international perspective, a big takeaway from the Cyprus Confidential revelations is how Cyprus, despite being a EU member state, became a hospitable financial hub for Russian oligarchs. In essence, the investigation has shown how an EU member state has facilitated Russian President Vladimir Putin’s autocratic regime and other dictators and anti-democratic actors in evading taxes and money laundering. Within the country, the findings of the investigation shine the light in dark corners, all the better for government and regulatory agencies to move forward on, more purposefully.