More controls on India-Mauritius tax treaty
The limitation of benefit clause seeks to prevent any abuse of the tax treaty’s beneficial provisions, and is a concession to India’s long-standing demands. (Image: JurisTax)
The wrangling over the tax treaty between India and Mauritius continues, with a limitation of benefit (LOB) clause being added to the double tax avoidance agreement (DTAA) as the latest placatory move by the island economy.
This amendment seeks to prevent any abuse of the tax treaty’s beneficial provisions, and is a concession to India’s long-standing demands.
India has requested repeatedly for an anti-abuse provision which controls the ability of residents of a third country to benefit from the DTAA between two other countries.
Indian and Mauritian authorities who are engaged in renegotiating the tax treaty between the two countries mutually agreed on the implementation of an LOB clause.
According to Marc Hein, Chairman, Financial Services Commission, the Joint Working Group (JWG) which represents delegates of both countries involved in the tax treaty negotiation, agreed to include the LOB clause.
This significant step was taken at the last meeting of the JWG held in Mauritius last week, and shows Mauritius’ firm intent to work towards a favourable outcome in the tax treaty negotiation between India and the island economy.
While addressing a gathering at an international tax conference organized by the Foundation for International Taxation, Marc Hein mentioned that India and Mauritius need to work towards a win-win situation.
He also added that, besides the step forward in the tax treaty negotiations, there is a separate tax exchange information agreement which has been approved and is just awaiting a formal sign-off.