Daily Lessons from Life 02 January 2011 - Indian Ministers Accused of Evading $24.73m in Taxes in Singapore

"Indian ministers accused of evading $24.73 million in taxes in Singapore - Sun, Jan 02, 2011 AsiaOne

SINGAPORE - Three ministers from India have been accused of evading up to $24.73 million in taxes from a company they set up here.

Tourism Minister G. Janardhana Reddy, his brother Revenue Minister G. Karunakara Reddy and their associate Health Minister B. Sriramulu invested $201 to start a company here.

They then signed an agreement with a one-dollar Singapore company, GLA Trading International, to sell it iron ore at a price far below market price before exporting it at a higher price to evade taxes.

Janardhana Reddy admitted to being director of that company.

The Reddy brothers own the Obulapuram Mining Company in India and have been accused of large-scale illegal iron ore mining in other parts of the country.

The incident has sparked the furore of other politicians in Karnataka, where the trio are from, and there have been calls demanding their sacking from Parliament."

Lessons for me:

1. evading tax is illegal while avoiding tax is legal. I guessed the 3 Indian ministers are not very educated on this difference or that they did it deliberately;

2. avoid tax legally while legal, it does not looked very good when the government ministers are not willing to pay tax for the businesses they run that turn in profit! Maybe they have no confidence that the taxes they paid will not benefit themselves and the nation. If this is the case, the nation is in deep trouble when the brightest and ablest are not trusting the nation's finance system!;

3. the fact that they choosed Singapore is an endorsement to the ease of setting up a company in Singapor and doing the trans-shipment deal. A plus for non-controversial businesses that want to set up in Singapore.

May the press continue to keep the public in focus on the development of this saga. Indian has recently being hit with a few charges of corruptions at the highest level of the nation political leadership. e.g. the 3G telecom saga, the Commonwealth Game scandal, etc. So, it will be a good time to take a hard look at themselves.