Black money: Lobby pushes Mauritius' clean image

A lobby group representing the Mauritius-linked global investors on Monday claimed that the island nation was cooperating in India's fight against black money and it was fully 'clean and transparent' on this front.

Beginning its campaign in India, the Global Institutional Investors Forum said that Mauritius was fully supporting India's fight against black money and money laundering and it was 'a clean, transparent jurisdiction of substance.'

GIIF claimed to be a non-profitable, charitable trust set up to represent and promote the views and interests of global investors operating from Mauritius.

The lobby group said that it wanted to 'dispel some misgivings and set the record straight' in view of the reports in India about 'integrity and trustworthiness of the international financial centre of Mauritius.'

A vast majority of foreign investments, both foreign direct investment and foreign institutional investors, come to India through Mauritius, but the African continent nation has also long been feared to be used for round-tripping of black money to and from India.

The issue of black money has become a major topic of debate in India and the GIIF statement incidentally came on a day when the Supreme Court appointed a special investigation team for monitoring the probe and the steps being

taken to bring back black money stashed away in foreign banks.

The concerns over a possible revision in the tax-treaty between India and Mauritius recently created a panic in Indian stock markets, as it was feared that the foreign investors operating through Mauritius could be taxed in India also.

As per the existing treaty, any entity can be taxed only in Mauritius and not in India, but the local regulations in the island nation spare them from any taxation.

A tax-friendly regime in Mauritius has always been a key factor in entities wishing to invest in India to set up shop in Mauritius.

However, this tax benefit has also come in handy for those wishing to indulge in round-tripping activities or routing of illicit funds back into India through Mauritius.

While there are agreements in place for exchange of information on entities indulging in tax evasion and tax frauds, it is suspected that the response has not been so encouraging from the authorities in Mauritius.

This has led to Indian government seeking revision of its tax treaty with Mauritius to make it easier for it to keep a tab on illicit wealth flow to and from the island nation.

The activities of lobby group GIIF in India has incidentally begun within weeks of the Finance Ministry saying last month that discussions for revising the treaty between the two countries were expected to begin in July-August.