Tax And White-Collar Crimes - Corporate Strategies – Part 2

Introduction

COVID-19 has put an unexpected brake on the economy, resulting in loss of jobs, opportunities, income for businesses and reduced demand for many products, leading to reduced production capacity in many cases. This reduction could be a result of a variety of factors, ranging from paucity of funds, lack of availability of labour or due to strict lockdowns imposed by Governments, which has resulted in restriction on movement of raw materials and finished goods. All of these could potentially also lead to an increase in tax related white-collar crimes, as discussed in the first part of this series.

In Part 1 of the series, we gave an overview, analysing the regulatory framework put in place to check white-collar crimes such as tax evasion, money laundering and financial fraud. This article deals with corporate strategies that companies may consider for the purposes of mitigating risks arising out of the potential violation of law, while also discussing global practices put in place to curb tax avoidance and evasion. Here we shall also deal with the risk of liabilities of directors and key managerial personnel with respect to such white-collar crimes.
Continue Reading Tax and White-collar crimes | Corporate Strategies – Part 2

The ripples from the 2008 global financial crisis (GFC) were felt all around the world, causing unprecedented strain on national exchequers and on companies’ balance sheets for several years. The COVID-19 pandemic is expected to cause greater economic hardship than even the GFC or the great depression of 1929[1]. Such events often lead to policy makers pushing for aggressive tax regimes aimed at bulking up national exchequers and tightening of regulatory frameworks to prevent leakages from their economies through tax evasion, money laundering and other such white-collar crimes.

In keeping with the global trend, India has, in the recent past, adopted a very strict approach towards offenses such as tax evasion, money laundering and benami transactions. The current pandemic and its economic repercussions are sure to test the regulatory framework as individuals and corporates alike are tempted to push the envelope. Even prior to the pandemic, the Indian Income Tax department had detected approximately INR 37,946 crore worth of tax fraud in financial year 2018-19 and INT 6,520 crore in April-June 2019.[2]


Continue Reading Tax and White-Collar Crimes: The whole nine yards (Part I)