Image Image Image Image Image Image Image Image Image Image Image Image

AfricaMoney | August 21, 2017

Scroll to top

Top

No Comments

DTAA: Mauritius to bring amendments

DTAA: Mauritius to bring amendments

Times of India reported today that Mauritius is ready to make amendments in order to allay concerns from India over the misuse of the Double Taxation Avoidance Agreement. The country has proposed to include a clause in the treaty to ensure only genuine investors from the island nation enjoy tax benefits, but is yet to get a formal response from New Delhi.  “Whatever loopholes are to be plugged, our prime minister has said we are willing to plug them. We have put in place all necessary precautions, all necessary checks and balances…” Mauritius Minister of Foreign Affairs, Regional Integration and International Trade, Arvin Boolell said.

The minister had discussed the issue with Indian authorities including commerce and industry minister Anand Sharma, who was in the country to attend Indian Ocean Rim Association for Regional Cooperation conference, and joint working group meeting is expected to be scheduled soon.

Boolell said Mauritius had submitted proposals for insertion of limitation of benefit clause but said the treaty should be responsive to the needs of both countries. He, however, did not give detailed contours of the proposed limitation of benefits clause.

“We submitted the proposals at the last joint working group in Delhi in March 2013… Mauritius is willing to consider insertion of appropriate clause in the treaty to prevent any perceived abuse and of course seek in return that there is no change to the Article 13 (of DTAA dealing with capital gains) because certainty and stability in the operation of the treaty should not be overridden,” he said.

A limitation of benefit clause will restrict the treaty benefit to only those investors that meet the conditions specified in the clause. The article 13 of the tax treaty between the two countries provides that capital gains arising in India from investments into India from Mauritius can only be taxed in Mauritius.

Since Mauritius does not tax capital gains, investments routed through the country escape capital gains tax making it an attractive stopover destination for foreign investors coming into India. India has received more than 40% of its foreign direct investment from Mauritius.

Mauritius’ response comes after finance minister P Chidambaram had told ET in an interview in April that the talks were back to the drawing board. New Delhi’s is keen to replicate the clause in India-Singapore tax treaty. A limitation of benefit clause in the India-Singapore tax treaty mandates that investors coming into India through Singapore have to incur minimum expenditure of $200,000 in Singapore and have a track record of two years to avail treaty benefits.

Such a condition ensures that the treaty partner draws some benefits from the investment made in local operations as also address issues of non-genuine investors enjoying treaty benefits.

But, Mauritius has concerns over replicating the Singapore provision since it’s a smaller economy than Singapore.

“We cannot make a proposal overnight where we will not converge our thoughts in respect to substance because it’s the substance that concerns growth because what is good for value addition of the sector is also good for the growth of financial services,” Boollel responsed when asked if Singapore like conditions would be acceptable to Mauritius.

Image Source: www.firstpost.com

Source: Times of India

Submit a Comment

Directory powered by Business Directory Plugin