Mauritius financial regulator rues delay in Indian tax pact revision
The island nation’s financial sector regulator said that uncertainties in the tax pact between India and Mauritius are hitting both countries alike, through an adverse impact on the flow of investments between the nations.
According to Mauritius’ Financial Services Commission (FSC) Chief Executive Clairette Ah-Hen, tax-pact related concerns are cooling off new investors, who no longer appear keen to exploit investment opportunities offered by Mauritius as a gateway to India. The island nation has traditionally been a preferred route for investments into the Asian emerging economy.
Underscoring the importance of “mana
ging perception”, she said that the current scenario is probably not helping new businesses which would have otherwise explored Mauritius for opportunities.
However, corporates who are already invested in the region with long-term relationships may be considered safe from the threat, Ah-Hen said. But, for those less established, or new businesses seeking entry into the region, the delay in the revision of the tax pact was certainly proving to be a major issue, she noted.
Differences over issues like capital gains and tax thereon have escalated differences between India and Mauritius, delaying the revision of the Double Taxation Avoidance Agreement (DTAA) between the two nations. The Indian government has expressed concerns that the treaty is being misused for tax avoidance and alleged round-tripping of funds. However, Mauritius has averred that strict measures are in place to prevent companies from taking advantage of the tax pact and exploiting any loopholes in the DTAA.
Since 2001, FSC has served as the integrated regulator for all non-banking financial services and global business sectors in Mauritius. The island nation has traditionally been a major route for foreign investments coming into India; however, the flow of funds from Mauritius has taken a hit in the recent past.
Image: Mauritius’ Financial Services Commission (FSC) Chief Executive Clairette Ah-Hen, Source: business.mega.mu
Source: Press Trust of India