Mauritius, which is the single biggest source of foreign direct investment into India, does not encourage round tripping, Cader Sayed-Hossen, Mauritius Minister of Commerce and Consumer Protection, said.
In an exclusive interaction with The Hindu on the sidelines of the partnership summit here on Tuesday, Mr. Sayed-Hossen said, “Our jurisdiction is extremely well regulated, and we are considered to be a White jurisdiction.” Institutions such as the Organisation for Economic Co-operation and Development (OECD) and leading global financial institutions regard the Mauritius financial system as ‘being clean’,” he said.
“There has been a lot of talk about round tripping by Indian entities operating from Mauritius, but nothing has ever been proved,” Mr. Sayed-Hossen said. “We have always been open about any probe or investigation that Indian authorities would like to initiate about the source of funds flowing in from Mauritius,” he said. Mauritius, he said, had cooperated well by allowing Indian authorities represented in the joint working group to ‘inspect our books’, he said. “Our policy is by no means geared to India,” he added.
Stringent regulationsMr. Treebhoohun, CEO, Global Finance Mauritius, the apex organisation of the financial services industry, claimed his country had stringent regulations that made it ‘impossible’ to do round tripping from that country. It was difficult for the Mauritius Government to monitor the trail of investments made by Indian entities through a chain of countries, including tax havens, to determine whether round tripping had indeed happened, he said. “It is for Indian authorities to determine where Indian entities are investing, just like the Americans do,” he said. “From our side, we are willing to run the extra mile to be compliant in every way,” he said.
“When funds flow from one country and through several other countries, it is very difficult for anybody to identify the original source of the money,” said Mr. Sayed-Hossen. “But the original fault would be with a system that allows money to get out without controls,” he observed.
Shamima Mallam Hassam, Director of the Mauritius Board of Investment, said India and Mauritius had agreed on the contours of a ‘framework’ that would allow the ‘exchange of information’ between tax authorities in the two countries. “A revenue officer of the Central Board of Direct Taxes is present at the Indian High Commission in Mauritius,” Ms. Hassam pointed out.
Mr. Treebhoohun said there had been a ‘shift’ in the direction of investments from Mauritius. Till a few years ago, investments to India accounted for about half of outbound investments from that country, but now it was only about 24 per cent, Mr. Treebhoohun said. Meanwhile, investments flowing into the African continent had risen to about one-third of the investments from Mauritius, he observed.
