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Economy Jul 5, 2012

Mauritius promises to take a relook at tax treaties

Amid concerns about Mauritius being used as a route for evasion of taxes, India today got an assurance from the country that it would have a relook over various aspects related to tax treaties, like DTAA.

"If there is room for improvement, we will constantly make room for improvement, of course, in respect and in compliance with the best international practices," Mauritius Foreign Minister Arvin Boolell said.

During talks with External Affairs Minister S M Krishna, Boolell also underlined the importance of Mauritius as a springboard for investments by Indian entrepreneurs to Africa.

Moneycontrol.com

Boolell also called on Prime Minister Manmohan Singh and is scheduled to meet Commerce Minister Anand Sharma .

India-Mauritius tax treaty provides that capital gains arising in India from investments in the country from the island nation can only be taxed in Mauritius.

As Mauritius does not tax capital gains, investments that are routed through the country escape this levy.

A large quantum of foreign investments in India are routed through Mauritius to escape the tax net, which has prompted the government to bring out the General Anti-Avoidance Rules (GAAR) to prevent abuse of the tax treaty.

Boolell said the Joint Working Group set up by the two countries on DTAA would meet from August 22-24 to iron out differences related to tax treaties. Krishna said India would assist Mauritius in surveillance of its Exclusive Economic Zone and continue joint efforts to fight piracy, which he described as an "expanding menace".

PTI


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