How India can defeat Cairns, Vodafone and other MNCs that acquire foreign holding companies to evade tax in India
Cairns UK has reportedly asked a French court to seize Indian governments assets there to enforce the award given a private arbitration panel.
With Modi ever-anxious to tow the line of globalists and the FM being a former employee of a Wall Street fraudster, it is not surprising that reports are leaking out that the Indian government is going to return the tax it had collected. I hope Modi does not bring the ultimate disgrace to the nation and let this two-bit UK company get away with murder.
A real nationalist would have moved to fence India’s assets abroad by
- ending bilateral investment treaties, particularly erasing the parts dealing with
- investor state dispute redressal and
- private arbitration panels (private courts)
- restoring the supremacy of Indian courts and Indian government sovereignty to tax Indian assets
- denying investments from jurisdiction-hopping multinationals and companies with multi-level shareholding or investor maze
- blacklisting foreign companies that have previously sued/threatened the Indian government
- ending FPI route in stockmarkets
To teach Cairns, Vodafone and other MNC a lesson in fair play, Indian government should use the same trick that these outfits had used to evade taxes. That is, India should transfer threatened foreign assets to a holding company formed by Indian states. This holding company will be distinct from the Indian government and cannot be sued. To further fence this holding company a state that does not have any foreign assets should be allowed to hold this company in trust using another holding company.