Threats to sovereignty

Dear Madam,

The appearance of your article entitled Racing for a place in the sun in the October edition of India Business Law Journal was very timely. Its publication coincides with the visit to India of three partners from Appleby, the largest of the offshore law firms. While your article was a good general overview of the current state of the offshore legal world, we would suggest that it perhaps underplays the seriousness of current moves by the OECD and the G20 to interfere with internal fiscal regimes of other sovereign states.

The key word is “sovereignty”, and of course your article recognizes that many of the offshore jurisdictions are in fact dependencies of the British crown or overseas territories of Britain. Thus it was very instructive to learn of recent changes to Indian law which will enable the Indian government to negotiate double taxation avoidance agreements and tax information exchange agreements with non-sovereign bodies.

However, what will have greater consequence for India will be whether or not the OECD and its core membership of European Union countries succeed in their ultimate objective of tax harmonization on a global scale. In other words, to impose a band of similar corporate tax rates for all economies – a one size fits all approach.