Indians Now Have More Offshore Wealth Hidden In Tax Havens In Asia Than In Swiss Banks
September 15th, 2017
The portion of wealth stacked by Indians in Swiss banks has considerably declined in recent years while the share of the same in their Asian counterparts like Hong Kong has increased.
The findings were revealed by a new research paper titled “Who Owns The Wealth In Tax Havens? Macro Evidence And Implications For Global Inequality”, co-authored by economists Annette Alstadsæter, Niels Johannesen and Gabriel Zucman.
According to the paper, Indians have very little money stacked in Swiss bank accounts, considering the country’s share of world GDP.
The above graph depicts the offshore wealth deposited by different countries in Swiss banks against their share of world GDP.
For India, the graph depicts the share of offshore wealth deposits in Swiss banks slightly less than 1% against its share of world GDP, which is slightly more than 2%.
The Times of India reports that over 53% of this Indian wealth is now closer home, in Asian tax havens like Hong Kong, Macau, Singapore, Bahrain and Malaysia. Swiss banks hold 31% of Indian wealth, down from around 58% in 2007.
However, the total amount of offshore wealth of India has increased by 89% since 2007 and accounts for 3% of the country’s GDP. In 2015, India’s offshore wealth was $62 billion (Rs 4 lakh crore).
World offshore wealth
The research paper calculated that the total offshore wealth in the world was $8.6 trillion (in 2015), which is about 11.6% of the world GDP. Since 2007, this has increased by 54%.
The world’s offshore wealth in Switzerland has also declined with about 25% of it stacked there in 2015. A decade ago, nearly 50% of the world’s offshore wealth was in Swiss banks.
In 2015, an unprecedented leak of 11.5 million files from the database of the world’s fourth biggest offshore law firm, Panama-based Mossack Fonseca, revealed information for more than 2,14,488 offshore entities.
It was found that Switzerland was the biggest tax haven – with 28% share of the world market. Following the Panama papers leak, a massive decline can be seen in offshore deposits in Switzerland.
There exists a wide disparity among countries in terms what share of their GDPs is hidden away in offshore tax havens. However, the main take away from the research paper is the clear wealth inequality worldwide.
“Among countries with a large stock of offshore assets, one finds autocracies (Saudi Arabia and Russia), countries with a recent history of autocratic rule (Argentina and Greece), alongside old democracies (United Kingdom and France). Among those with the lowest stock of offshore assets, one finds relatively low-tax countries (Korea and Japan) alongside the world’s highest tax countries (Denmark, Norway),” reads the paper.
Taking into consideration the existing income inequality in the world, adding the offshore wealth of the top 1% of the world would further increase this disparity.