Search the Internet           Tips

No changes contemplated in Indo-Mauritius double taxation law

Mauritius Economic Development Minister Sushil K C Khushiram on Monday ruled out any changes in the double taxation agreement between the two countries in the face of reports of his country being increasingly used as a tax haven by foreign portfolio investors in India.

"We (the two countries) agree that the double taxation agreement between the two countries is working well and there is no question of amending or altering it," Khushiram said after his meeting with the Finance Minister Yashwant Sinha and senior revenue officials.

Khushiram, who also looks after financial services and corporate affairs, did not agree with the perception that Mauritius was being increasingly used to route ill-gotten money abroad into portfolio investments in India by foreign institutional investors.

Mauritius has now been increasingly recognised by world community as being a "credible international financial centre" and this was evident from the fact that the island country has been excluded from the blacklist of countries indulging in money laundering prepared by OECD.

"We (Mauritius) are seen as a clean and credible financial centre with effective regulation," he asserted.

Khushiram, who is the first Mauritius minister to visit India after the new government took over there, said Mauritius has passed only in June last "economic crime and anti-money laundering act" to ensure that the country was not used as a tax haven.

Mauritius has also asked OECD to recommend anything even remotely identifiable as harmful functioning by the country in this regard, he said.

He said his country was also keeping a close watch on offshore companies which have set up offices there prior to grant of certificate of registration, adequate safeguards are being taken to ensure that it is not a company on paper, but has substantial presence and operations.

Asked if it was right to impose capital gains tax on financial inflows, Khushiram said internationally capital gains on financial inflows are not taxed by host country and the double taxation agreement between India and Mauritius was in line with this procedure.

He said it was not correct to describe Mauritius as a tax haven and added the island country has earned "first class reputation as an international centre of distinction because of close monitoring and regulation of financial flows."

Khusiram described his meetings with Sinha and senior revenue officials as "very useful and cordial" and the two countries have decided to 'very seriously" consider enhancing the traditionally strong bilateral economic co-operation and investments.

Tell us what you think of this report