India and Mauritius are expected to sign a revised Double Taxation Avoidance Convention (DTAC) after next round of talks scheduled for early April in New Delhi. The Indo-Mauritian DTAC came into force in 1983 but over the decades successive Indian governments have raised concerns over its misuse by investors seeking to avoid tax liability.
Although the exact contours of the negotiations geared towards curbing the role of and scope for Mauritius-based fictitious companies to route money back into India are not immediately known, Prime Minister Navin Ramgoolam has indicated that the talks are progressing satisfactorily.
Dr. Ramgoolam told visiting Indian journalists on Wednesday that both sides had already found some common ground to find a solution to allay each other’s concerns. While India is keen to protect the DTAC from being misused for money laundering, Mauritius, for its part, wants to be seen as not just a tax haven.
Maintaining that the expression tax haven has been much maligned, Dr. Ramgoolam said Mauritius had a clean system that could offer a win-win situation for both countries. He pointed out that the tax treaty was signed in 1983 at India’s request and the revised pact would iron out certain pending issues. President Pranab Mukherjee discussed these and other issues with Dr. Ramgoolam on Tuesday, particularly the progress in the discussions of the Joint Working Group (JWG) on the DTAC in its last two meetings. Sudhir Vyas, Secretary (West) in the Ministry of External Affairs, said “there has been progress in certain areas” but “there are issues pertaining to FDI that we all know and misuse of the treaties by certain elements,” which both countries hope to resolve soon.
