India-Mauritius tax treaty negotiations to take place on June 29
Negotiations on the India-Mauritius Double Tax Avoidance Agreement are set to take place on June 29 when Finance Minister Vishnu Lutchmeenaraidoo will submit a new protocol on issues related to capital gains with respect to DTAA.(Image:kunte-modha.com)
The General Anti-Avoidance Rules (GAAR) are of no use to India, and may work against the country by hurting foreign inflows, are the strong words coming in from Vishnu Lutchmeenaraidoo, the Finance Minister of Mauritius, as said during an interview with CNBC-TV18.
Lower taxation is the need of the hour for India, while Mauritius has put in place stronger anti-black money laws and a mechanism to stop round-tripping to India.
All these would play a role when India and Mauritius renegotiate their Double Tax Avoidance Agreement (DTAA) later this month as negotiations on India-Mauritius’ DTAA are set to happen on June 29.
Vishnu Lutchmeenaraidoo highlighted that the DTAA is, and has always been, a win-win situation. Mauritius was the tunnel used for channelling funds into India such that India received investment while Mauritius generated employment.
A DTAA is based on a win-win proposition for both partners. There has never been a deterimental situation in the India-Mauritius relationship so far, as Mauritius has always emerged a winner, and so has India.
There are issues that had to be dealt with in terms of round-tripping where investors in India went to Mauritius and reinvested in India as an unethical practice. Since then, all necessary precautions have been taken to ensure that Indians who have taken their money all the way to Mauritius for investment cannot go ahead and simply use the island economy as a platform to invest it back in India.
Finally, June 29, or possibly June 30, would be the occasion for Mauritius and India to agree on a protocol and a draft protocol that can be used as a basis to move very quickly with a solution which will be limited to four or five clauses which are still outstanding.