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Cross-border realty deals under money laundering scanner

OECD has devised a framework for enhancing tax transparency in real estate transactions

Question: Are cross-border real estate transactions under the scanner of tax and money laundering authorities?

ANSWER: The Financial Action Task Force has recently come to the conclusion that real estate sector carries the risk of money laundering activities, which is done through complex structures whereby the identity of the real owners is concealed. There are indications that investments by non-residents in cross-border real estate are used to shelter undeclared assets which would otherwise be subject to Common Reporting Standards. Further, cross-border real estate holdings are frequently under-reported in order to evade taxes. Therefore, the Organisation for Economic Co-operation & Development (OECD) has devised a framework for enhancing tax transparency in real estate transactions with a view to mitigate leakages of tax revenue and counter money laundering. OECD has also emphasised the need for countries to enter into agreements for exchange of information. This exchange would not only reduce tax evasion but also assist other law enforcement authorities who are tackling activities of money laundering, countering the financing of terrorism, anti-corruption and leakages of customs duties.

Question: Climate change has adversely affected most countries this summer. Is India taking adequate steps to reduce its dependence on fossil fuels and drastically promote renewable energy?

ANSWER: Promoting renewable energy has many challenges apart from incurring substantial capital expenditure. While sun and wind are the ultimate sources of renewable energy, the development is uneven statewise as some states of India have more sunshine than others. The issue is the same with wind power. Currently, the renewable energy capacity in India is 175GW. This is proposed to be increased to 450 GW by 2030. Though fiscal incentives have been given in India to encourage investment in solar power and wind energy, storage costs for renewable energy are quite substantial, sometimes making the project unviable. On September 10, the Indian Government signed an MoU with Saudi Arabia whereby the national grids of both countries will be connected through an undersea interlink. This would ensure robust grid management for both countries and storage costs would be considerably reduced. It would make it possible for power to move through the grid from one location to another in order to satisfy peak power demand. In short, the challenges faced at present are proposed to be solved by connecting national grids. Both countries are also developing energy storage technology.

Question: Hackers are introducing new malware and viruses faster than before. Are Indian businesses taking adequate steps to counter these threats?

ANSWER: Business organisations are constantly upgrading their cyber security strategies. Companies are accelerating their shift to the cloud and hybrid work models. The proliferation of ChatGPT large language models and low-code no-code platforms are proving to be a boon for developers. The need to counter cyber threats has resulted in an explosion of innovative solutions coming out of tech hubs in India. Global cybersecurity firms consider India to be a crucial node in their development process and have set up extensive engineering centres in the country. Most of the global players acknowledge that India gives them a competitive advantage in the marketplace. Those who have set up cybersecurity companies in India are involved in innovative research, vulnerability management and Internet of Things. Engineers in India are innovating across next-gen firewalls, cloud delivery security services and secure access service edge with machine learning and artificial intelligence to help customers counter network security threats. Jobs in cybersecurity are currently the most lucrative in the technology space.

H.P. Ranina is a practising lawyer, specialising in tax and exchange management laws of India.