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The Centre’s white paper on black money said that tax authorities are not able to check round tripping.
Round tripping happens when Indian money comes back to India through misuse of corporate vehicles (such as companies and trusts) and other legitimate means.
It observed that companies conceal the real beneficiaries by creating an artificial personality.
Secrecy granted by certain jurisdictions is misused and a non-transparent structure created using multiple entities that own each other.
It said that instances such as Vodafone will come under tax scrutiny with increasing realisation about the harmful effect of ownership being concealed behind a complex corporate ownership structure.
The Hutchison group sold its entire stake to Vodafone for US$ 11.2 bn through transfer of a solitary share of a Cayman Islands company, the report said.
A 2011 World Bank Report on the top 150 corruption cases found that corporate vehicles were misused. The misuse amounted to US$ 50 billion. To plug the gap on the misuse of legal privileges, countries are now asking for details of beneficial owners.
The Financial Action Task Force (inter governmental body against terrorist financing and money laundering) is tightening its rules to identify real owners rather than legal.
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