Paradise papers :GMR Group Tax avoidance strategies Exposed

New Delhi Nov 9: The International Consortium of Investigative Journalists (ICIJ) has once brought out paradise papers - the documents to shun the light on offshore entities.

The documents reveal that how GMR group created a web of companies that involved setting up at least 28 entities across 10 jurisdictions, including Mauritius, the Isle of Man, Spain, Singapore, and Malta.

Documents reveal that GMR Group adopted strategies to avoid paying taxes, converted inter-company loans across jurisdictions into compulsory convertible debentures to avoid transfer pricing issues and, change the nature of funds (debt to equity and vice-versa) when they were transferred from a subsidiary in one jurisdiction to another.

GMR held 40 percent stake in ISG International Airport Turkey through GMR Infrastructure Ltd India (35 percent) and GMR Spain (5 percent). Records show it decided to move the holding with the Spain entity to a company registered in Malta to benefit from a favorable tax treaty.

The benefit of investing in ISG, Turkey through MALTA Company will be that Turkey and Malta have favorable tax treaty whereas there is no tax treaty between Isle of Man & Turkey.

Similarly, the GMR group has formed many such subsidiaries in Malta, Mauritius, Isle of Man etc and modified nature of transactions and benefitted hugely.

GMR Response

GMR Group is/was having business entities in various jurisdictions like Turkey, Singapore, Indonesia, Nepal, Philippines, etc. The business of infrastructure where separate business entities need to be set up for each project/activity on account of concession agreements, multiple partners necessarily need a large number of companies.Currently, we do not have any entity in Spain. The Singapore entity is involved in the construction of airport terminal along with our partner in the Philippines.