Over 100 business and political leaders from India will join the world’s rich and powerful, including 50 government heads, to discuss current state of economic affairs in freezing weather of Davos
Davos: As the annual World Economic Forum (WEF) jamboree begins here tomorrow, over 100 business and political leaders from India will join the world's rich and powerful, including 50 government heads, to discuss current state of economic affairs in freezing weather of this Swiss Alpine resort town, reports PTI.
The top leaders attending this annual Davos meet would include British prime minister David Cameron, German chancellor Angela Merkel, Russian prime minister Dmitry Medvedev and Italy’s Mario Monti, along with heads of global organisations like World Bank, IMF, WTO, United Nations, as also chief executives of hundreds of global blue-chip companies.
Indian government and India Inc will be strongly represented at the six-day event, where India’s growth story and its recent slippages, amid a still struggling global economic recovery, are expected to be closely watched and widely discussed with “Resilent Dynamism” being the theme of this year’s annual WEF meeting.
The Indian delegation, comprising about 100 business and political leaders, would be headed by Union minister Kamal Nath, who emerged as one of the key strategists in the passage of contentious retail foreign direct investment (FDI) Bill in Parliament last month.
Nath, minister for urban development and parliamentary affairs, would be accompanied by his senior colleague and minister for commerce and industry Anand Sharma, heavy industries and public enterprises minister Praful Patel and power minister Jyotiraditya Scindia.
On the sidelines of this event, which would continue till 27th January, the ministers are expected to meet their government leaders from various countries, as also heads of numerous multi-national companies (MNCs) to apprise them of steps being taken by India to strengthen its position as a robust investment destination.
Corporate India would be represented by Anand Mahindra, Chanda Kochhar, Rahul Bajaj, Azim Premji, Sunil Bharti Mittal and heads of a number of Indian companies, including IT giants like TCS, Infosys, HCL Technologies and Mahindra Satyam.
Those expected at the WEF’s 43rd annual congregation of top leaders also include billionaire industrialist Mukesh Ambani and non-resident Indian (NRI) steel tycoon Lakshmi Mittal.
With a major part of the world still reeling under economic crisis, selection of the theme by the Geneva-based WEF has already faced some criticism.
But, the WEF says that the need to bring in a ‘resilient dynamism’ becomes much more relevant in times like these when the world is continuously faced with unexpected events of enormous consequences—ranging from financial crisis to the Arab Spring to natural disasters like earthquake and cyclones.
Announcing the annual meeting, WEF founder and executive chairman Klaus Schwab said that the world is seeing “a new reality of sudden shocks and prolonged global economic malaise, particularly in major economies experiencing economic austerity”.
“Future growth in this new context requires dynamism bold vision and even bolder action. Either attribute Resilience or Dynamism alone is insufficient, as leadership in 2013 will require both,” he said.
Top global public leaders who will participate are Kofi Annan, UN Secretary-General Ban Ki-moon, European Central Bank president Mario Draghi, OECD secretary-general Angel Gurra, World Bank president Jim Yong Kim, IMF managing director Christine Lagarde, WTO chief Pascal Lamy and American senator John McCain.
This year’s meeting, which would be WEF’s 43rd at Davos, would be co-chaired by Coca-Cola chief Muhtar Kent, Dow Chemical CEO Andrew Liveris, UBS chairman Axel Weber, Embraer president Frederico Curado, Toshiba chairman Atsutoshi Nishida, as also Transparency International’s Huguette Labelle.
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If media reports of early this month are any indication, a series of steps taken by the US Internal Revenue Service will have some impact on the flow of dollar funds from US-based NRIs and PIOs to commercial banks in India
The US government, nicknamed “Uncle Sam” after Samuel Wilson, who first supplied barrels of beef to the US army during the war of 1812, has been on a prowl to plug all loopholes on tax evasion possibly to shore up its revenues. Surprisingly, it has come out with Offshore Voluntary Disclosure Programs (OVDPs) three times during the last three years. The OVDP was first introduced in 2009, and followed by another offshore voluntary disclosure initiative in 2011 which was initially valid till 31 August 2011 but later extended till 9 September 2011 due to the Hurricane Irene that hit the US at that time.
The IRS (Internal Revenue Service) again introduced an open-ended OVDP in January 2012 on account of strong interest witnessed in the 2009 and 2011 programmes. According to the IRS, under this scheme it is offering people with undisclosed income from offshore accounts another opportunity to set right their past mistakes and get current with their tax returns. However, the 2012 OVDP has a higher penalty rate than the previous programmes but said to offer clear benefits to encourage all taxpayers in America to disclose foreign accounts now rather than risk detection by the IRS and possible criminal prosecution later.
As per the Bloomberg report dated 8 January 2013, a person of Indian origin (PIO) and a New Jersey client of HSBC Holdings Plc pleaded guilty to charges that he hid as much as $4.7 million through Swiss and Indian accounts not declared to the US Internal Revenue Service.
As per the reports, he will pay a sum of $2.37 million as taxes and penalty for failing to file reports required for foreign accounts. He is one of several HSBC clients charged with opening undeclared accounts through bank’s NRI division, which were marketed to US clients of Indian origin.
Another New Jersey PIO businessman pleaded guilty in April 2011 to conspiring with HSBC bankers to hide his Indian accounts from the IRS. Last August, federal jurors convicted a Milwaukee neuro-surgeon of Indian origin for filing a false tax return and failing to file a report of foreign bank and financial accounts related to HSBC accounts in India.
It is possible that many NRIs or PIOs residing in the US have invested their surplus funds in India or with different tax havens world-wide but they may have either innocently or unknowingly omitted to offer their overseas income to tax in the country of their residence. They might, therefore, unwittingly become victims of IRS’ aggressive tax recovery efforts. And to come out of this predicament, they should consult their own tax advisors about the applicability or otherwise of these changed regulations to their own residential status over there. If it applies to them, they should then consider the advisability or otherwise of voluntary disclosure permitted by US government. The present OVDP scheme is an open-ended scheme without any closure date, but may be closed any time as stated on the website www.irs.gov. Since the website was last updated on 29 August 2012, it is not clear whether the scheme is still in operation and the NRIs wishing to avail the benefit of the scheme should contact their financial/tax advisors and be guided accordingly.
IRS efforts yielding results
The Internal Revenue Service of the US has said that its offshore voluntary disclosure programmes have so far resulted in the collection of more than $5 billion in back taxes, interest and penalties from 33,000 voluntary disclosures made under the first two programmes. In addition, another 1,500 disclosures have been made under the new programme announced in January 2012. This voluntary disclosure programme is said to be a part of the wider effort by the IRS to stop offshore tax evasion and ensure tax compliance by all those Americans who have invested their surplus funds in tax-havens all over the world.
Though these rules are currently introduced in the United States of America, there is every possibility of its spreading to other countries as well and NRIs and PIOs living in different geographies should be wary of local regulations and be prepared to comply with them in the interest of peaceful living in the country which they have adopted as their permanent abode.
(The author is a finance professional and he writes for Moneylife under the pen-name ‘Gurpur’.)