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India targets overseas tax evaders

India’s new Prime Minister, Narendra Modi, has delivered a bold statement of intent directed against India’s tax evaders. In one of his first acts as India’s new premier, he has made the recovery of billions of dollars transferred into overseas accounts for the purpose of evading tax a top priority for his administration. One calculation puts the figure as high as $2 trillion.

Modi has set up an investigative task force of former judges and current regulators to trace, track and repatriate assets sent abroad. This move follows similar moves in recent years by the UK and USA to close the net on individuals and corporates illegally moving funds overseas.  In 2011, the South Asian continent ranked third in the world behind only China and Russia in respect to the illegal movement of money abroad according to a 2013 report by Global Financial Integrity.

It is as yet unclear which methods the Indian government will deploy to seek the return of assets hidden overseas. There is a well-established principle of English law that the English courts will not involve themselves in the enforcement of another sovereign state’s revenue law. However, to the extent that India’s investigations give rise to claims that are not tax claims per se, but are instead civil or criminal claims of a different character, the English Courts are well placed to assist the Indian state in its legal processes. Provisions under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005, and s.25 of the Civil Jurisdiction and Judgment Act 1982 grant the English Court dynamic powers to assist overseas claimants with civil or criminal asset recovery procedures. Moreover, the willingness of the English Court to assist overseas governments was emphasised in the recent case of United States v Abacha [2014] EWHC 993 (Comm), which highlighted the importance of international judicial cooperation in the fight against fraud.