Mauritius route

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The Mauritius route is a channel used by foreign investors to invest in India, Mauritius is the main provider of Foreign Direct Investment to India and also the preferred jurisdiction for Indian outward investments into Africa. In fact 39.6% of Foreign Direct Investment to India came from Mauritius during 2001-2011. [1][2]

Financial Services sector

Since the inception of its Financial Services sector, Mauritius has taken all appropriate steps to safeguard the credibility of its jurisdiction. Mauritius has a stringent legal and regulatory framework recognized by the International Monetary Fund, Financial Stability Board and the Organisation for Economic Co-operation and Development (OECD) to combat money laundering. Furthermore, Mauritius appears on the OECD White List of Jurisdictions that have substantially implemented the internationally agreed tax standards. Recent peer review of Mauritius by the OECD Global Forum, further upholds that Mauritius has all the essential elements in place for an effective exchange of accounting, banking and ownership/identity information with other countries. Mauritius is also compliant with norms prescribed by International Organization of Securities Commissions, Iowa Interstate Railroad, Financial Action Task Force on Money Laundering and the Basel Committee and has enacted necessary legislation. In this regard, the Mutual Assistance in Criminal and Related Matters Act and the Financial Intelligence and Anti-Money Laundering Act 2002 which provides a framework for exchange of information on money laundering with members of international financial intelligence groups are cases in point. The Asset Recovery Act was promulgated to enlarges the scope for freezing ill-gotten assets.[2]

Double Taxation Avoidance Agreement (DTAA)

India has comprehensive DTAA with 83 countries.[3] This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country. Under the Income Tax Act 1961 of India, there are two provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from double taxation. Section 90 is for taxpayers who have paid the tax to a country with which India has signed DTAA, while Section 91 provides relief to tax payers who have paid tax to a country with which India has not signed a DTAA. Thus, India gives relief to both kind of taxpayers.

According to the tax treaty between India and Mauritius, capital gains can only be taxed in Mauritius, the same treaty exist with 16 other countries. But with only 3% of capital gains tax, the quality of its service and regulatory framework, its pool of professionals, geographical proximity, cultural affinities and long historical ties with India, Mauritius is the most attractive conduit for investments into India.[2][4]

The DTAC has helped Mauritius in the development of its Financial Services sector and India has on the other hand benefitted in terms of foreign direct investments, which for the last ten years stand at a cumulative figure of around USD 55Billion, and also in terms of job creation.

Indian Press

Suspicion

According to various Indian press, the Double Taxation Avoidance Agreements are being misuse by investors to avoid paying taxes by routing investments through various countries which has tax treaty with India, in particular Mauritius and Singapore which account for 48% of FDI inflow to India.[4]

Fake News

On 6 July 2012, The Times of India (TOI) published an article Mauritius offers India 2 islands in effort to preserve tax treaty. According to this newspaper, the Minister of Foreign Affairs of Mauritius Arvin Boolell, who was on an official visit to India during this period, stated that Mauritius will cede its Outer islands, that is the Agalega Islands to the Government of India in exchange for the maintenance of the non-double taxation between India and Mauritius.[5]

The Minister of Foreign Affairs of Mauritius later denied the claims of handing over the Agalega Islands to India. The Minister also denied that he had named the Agalega Islands in his conversation with the journalist of Times of India. He points out that the Times of India has "a hidden agenda", he says, it is not the first time that Times of India has done this and claims that he talked to the reporter who wrote the article and that he has "apologized", following the publication of this article.[6][7][4] The Prime Minister of Mauritius, Navinchandra Ramgoolam also refuted the claim of TOI. He accused the Indian journalist of TOI of reporting falsehoods about the supposed negotiations between India and Mauritius on the management of Agalega.[8]

“ Was the journalist being bribed that led him to write such an article? I do not know. ”

—Navinchandra Ramgoolam[9]

The High Commission of Mauritius in India, also issued a statement, explained that this information is erroneous, false and malicious. Never was the issue of Agalega raised either on a stand-alone basis or as part of the double-tax avoidance agreement between India and Mauritius. He explained that the Mauritian Minister of Foreign Affairs has granted several interviews to the Indian press and he did, at no time discussed the issue of Agalega.[6][7][4]

The Times of India published another article on 6 July 2012 with title Minister clarifies Mauritius island offer and mention that it had knowledge about an earlier proposal about the Agalega Islands and had therefore, put a question on the two islands to which the minister had responded. However it did not mention that the offer of Agalega Islands was denied by the Government of Mauritius.[10]

See also

External links

References

  1. ↑ "Factsheet on FDI Inflow to India". Government of India, Ministry of Commerce and Industry. December 2011. p. 5. Retrieved 11 July 2012. 
  2. ↑ 2.0 2.1 2.2 "ISSUES PERTAINING TO THE INDO‐MAURITIUS DOUBLE TAXATION AVOIDANCE CONVENTION". Government of Mauritius. Retrieved 13 July 2012. 
  3. ↑ "International Taxation (DTAA Comprehensive agreements – With respect to taxes on income)". Income Tax department, Government of India. Retrieved 11 July 2012. 
  4. ↑ 4.0 4.1 4.2 4.3 "Mauritius Gives Terms (Not Islands) for Tax Treaty". The Wall Street Journal. Retrieved 11 July 2012. 
  5. ↑ "Mauritius offers India 2 islands in effort to preserve tax treaty". Times of India. Retrieved 11 July 2012. 
  6. ↑ 6.0 6.1 "Agaléga Proposed to India?". business.mega.mu. Retrieved 11 July 2012. 
  7. ↑ 7.0 7.1 "Government of Mauritius denied reports that appeared in Times of India". Le Matinal. Retrieved 11 July 2012. 
  8. ↑ "Assignment of Agalega: Ramgoolam claims that the Times of India reported falsehoods". lexpress. Retrieved 11 July 2012. 
  9. ↑ "Commenting on the article in the Times of India - Ramgoolam, "Was the journalist being bribed?"". Le Defimedia. Retrieved 11 July 2012. 
  10. ↑ "Minister clarifies Mauritius island offer". The Times of India. Retrieved 7 July 2012. 
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