Long accused of being a route for avoiding taxes for foreign investments into India, Mauritius says it has put additional safeguards in place to thwart such wrong perceptions and to boost its image as a preferred global financial centre.
Mauritius' integrated financial sector regulator FSC has put in place 'greater substance requirements' for global business companies operating from its jurisdiction to ensure their substantial presence there, and not just a 'proxy address' to benefit from tax treaties with India and other nations.
"These additional requirements being imposed on Global Business Category 1 Companies will lead to the creation of more economic nexus between those companies and the economy of the island," Financial Services Commission (FSC) Chairperson Marc Hein told PTI.
Most global investors use GBC-1 route to make investments into India and other countries through Mauritius.
Asked whether these safeguards would help put in place greater checks on round tripping and money laundering concerns, Hein said that these companies would now "interact more with our economy, provide more jobs to our people, rent more offices, spend more money and indeed keep on paying more taxes in Mauritius".
"Similarly, it will then be difficult to contest the fact that such companies
are truly tax residents of Mauritius as they will have an enhanced presence in the jurisdiction," said Hein who was here for an international taxation conference.
To further ring-fence its jurisdiction from any attempts of round-tripping and money laundering activities, Mauritius has agreed to include a 'limitation of benefits (LOB)' clause in its revised tax treaty with India.
While specific details of this clause in India-Mauritius tax treaty are being ironed out, LoB clauses are typically aimed at preventing 'treaty shopping' or inappropriate use of tax pacts by third-country investors.
The LOB clause limits treaty benefits to those who meet certain conditions including those related to business, residency and investment commitments of the entity seeking benefit of a Double Taxation Avoidance Agreement (DTAA).
Besides, a Tax Information and Exchange Agreement (TIEA) between India and Mauritius has been finalised.
"We hope that the agreement will be signed by both parties whenever both governments are ready for this. In fact Mauritius has been fully cooperative to furnish information whenever reasonable information has been requested to the Mauritian authorities.
"The FSC and Sebi (India's capital markets regulator) have been exchanging information for years," he said, while adding that the Mauritian Financial Intelligence Unit is also cooperating with the Indian FIU for exchange of information.
© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
Mauritius' integrated financial sector regulator FSC has put in place 'greater substance requirements' for global business companies operating from its jurisdiction to ensure their substantial presence there, and not just a 'proxy address' to benefit from tax treaties with India and other nations.