Tax ball in India’s court, says Mauritius minister

Mauritius is awaiting India’s response to a proposal it submitted nearly four months ago for an amendment to the double taxation treaty between the two countries that the island nation’s Foreign Minister said would satisfactorily prevent the misuse of the agreement.

Mauritius submitted the proposal on ‘limitation of benefits’ at the last Joint Working Group meeting in March 2013.

The two countries decided to set up the JWG in 2006 to revisit the terms of the 1982 Double Taxation Avoidance Convention, also known as Double Taxation Avoidance Agreement.

“Now we are waiting for our good Indian friends to react, and we are waiting for them to schedule a date for the meeting of the two Finance Ministers,” Arvin Boollel, Minister for Foreign Affairs, Trade and Regional Integration told Indian reporters on the sidelines of a meeting of the regional group of Indian Ocean Rim countries.

Mauritian Finance Minister Xavier Duval has been on standby to visit India to sign a separate agreement on tax information exchange that has already been finalised.

“My friend the Minister of Finance is looking forward to travel to India to sign this [TIEA] between the two countries,” the Foreign Minister said, pointing out that this agreement was further evidence that Mauritius was willing to “walk the extra mile” in its efforts to “plug every loophole”.

Thanks to DTAC, an estimated 40 per cent of the foreign direct investment into India comes from Mauritius. While India has benefited from the flow of money, the Indian Ocean island nation has been at the centre of suspicions that it acts as a haven for companies and individuals, both Indian and others, seeking to avoid tax in India.

Mauritius, Mr. Boollel said, had also already implemented several measures to prevent abuse of the DTAC in the “unique” conditions that it has for issuing tax residency certificates, to the extent that some financial institutions were accusing Mauritius of being “too tight”.

New Delhi has not yet set a date for the signing of the TIEA. Mr. Boollel said when he raised the issue during a bilateral discussion with the Minister for Commerce and Industries Anand Sharma during his visit to Mauritius for IORARC Business and Economy conference here last week, he was informed by the Indian side the dates were being worked out.

As well as TIEA, Mauritius is waiting to hear from India on the “limitation of benefits” amendment it proposed to DTAC earlier this year. Though Mr. Boollel was not forthcoming about the exact nature of the proposal submitted by Mauritius, he said it would “ensure satisfaction for both parties”, that is, his country and India.