Tax Alert: Mauritius and India relations hit new low
New Delhi decided Monday to call off a Joint Working Group meeting on Double Taxation Avoidance Convention (DTAC) scheduled to take place this week.
Dealing a big blow to relations between Mauritius and India, already at a low following tax avoidance allegations by the Indian government, New Delhi decided Monday to call off a Joint Working Group meeting on Double Taxation Avoidance Convention (DTAC).
Scheduled to take place this week, the official reason given for the cancellation of the three-day meeting, considered crucial for Mauritius’ offshore sector, was the non-availability of India’s head of delegation.
However, sources privy to the matter said India’s decision could have been reached due to Mauritius Prime Minister Navin Ramgoolam’s remarks on the treaty during the World Economic Forum (WEF) in Davos.
At the WEF annual meeting in Switzerland last meet, Ramgoolam met with India’s Finance Minister Palaniappan Chidambaram.
Ramgoolam was reported to have expressed his displeasure with India’s position on the tax treaty, especially the amendments India was proposing.
Ramgoolam said on Mauritius radio and television that during his meeting with minister Chidambaram, he informed the Indian finance minister that Mauritius was not happy with the manner in which the talks were being conducted.
“I do not think that the way the negotiations are being done is correct, and I made this clear to him,” he added.
While both Chidambaram and Indian Prime Minister Manmohan Singh attempted to assure Ramgoolam that no decision unfavorable to Mauritius would be taken, it appears that the position of the Mauritius premier has angered New Delhi.
The Indian government has still not given a new date for the forum which has entered into its eighth year since the creation of the Joint Working Group that supervises the treaty’s implementation.
Also, relations between the two countries have soured further since October last year when India requested the United Nations for permission to exploit mineral resources in the zone claimed by Mauritius as its territorial waters.
Mauritius reacted through its fisheries minister on the grounds that India had not asked its permission for exploiting its resources and that the island economy did not appreciate the snub.
Moreover, New Delhi has not yet responded to Mauritius demand for explanation on its request before the UN, posing a big question mark over the future of Mauritius-India relations.