Seychelles: just another honeymoon destination or the next big tax haven?

Seychelles, which up until now was just another beautiful island where rich people went for their destination weddings and honeymoons could well turn out to be the next “Panama” for some wealthy Indians and NRIs.

Many such super rich Indians have come to know that information about their investments and bank accounts in the East African island country has been leaked. This list includes directors or shareholders of shell firms, otherwise known as international business companies, who hold huge funds in several bank accounts in Seychelles.

"We have been alerted about a possible leak, similar to that in case of Mossack Fonseca. Most likely, activist hackers or disgruntled employees have fished out information from Fonseca's database on Seychelles. We believe the information, which may have been collected earlier, could soon find its way into the public domain," a senior tax professional told ET, requesting anonymity.

Mossack Fonseca is a Panamanian law firm that came under the scanner of media worldwide after a group of journalists from several countries came together to reveal investment details about Fonseca's clients, spread across the globe.

If a senior lawyer is to be believed, a few NRIs who have done legitimate investments are even taking a legal action against the firm for failing to honor the client confidentiality clause.

Some have also started to prepare their defence, fearing questions by the IT department about their investments or directorships in Seychelles.

Seychelles, because it’s not only convenient when it comes to setting up trusts and foundations, it also offers prevalence of bearer shares, providing anonymity, given that these securities need not be registered in the name of an owner.

However, Seychelles is not that big a tax haven, because of it being less stable. With India, it has got good diplomatic relations thanks to PM Modi's recent visit, with extended credit lines, but no clause exists for tax and information sharing arrangements.

"It's unclear whether India can leverage its existing ties with Seychelles to extract information. Also, it's unlikely that too many big names and celebrities will be linked to Seychelles which, like Cyprus, has been also used by Russians. My guess is whatever information that emerges would be dated as money has already moved to places like Dubai," said another lawyer.

Image source