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June 20, 2001
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Money > Business Headlines > Report June 20, 2001 |
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Mauritius goes for thorough review of tax systemSantosh Tiwary The Mauritius government has undertaken a thorough review of its tax system aimed at rationalisation of the fiscal incentives. "The government has already secured technical assistance from international institutions to undertake a thorough and critical review of our tax system and rationalisation of our fiscal incentive regime", the Mauritius finance minister said in his budget speech. The review of the fiscal incentive regime by Mauritius assumes significance in the Indian context as huge investments are routed into the country's stock market by foreign institutional investors through Mauritius to avail tax benefit. Under the double taxation agreement between the two countries, capital gains is taxable in the resident country (Mauritius in this case). Mauritius has promised OECD to do away with harmful tax practices including availability of tax incentives to foreigners, which are not offered to the domestic companies for the same activity by 2005. To begin with, Mauritius had imposed a uniform 15 per cent tax on offshore companies including those registered before July 1, 1998 in its 2000-01 budget. Prior to this, offshore entities registered before July 1,1998, could opt for a rate of tax in Mauritius varying between 0 and 35 per cent. Further, foreign tax credit for the funds registered in the country after June 30, 1998, and paying a flat rate of 15 per cent, was reduced to 80 per cent from 90 per cent as an initial step towards its phase out. The budget speech for 2001-02, however, has not touched this issue. While Mauritius is keen on taking steps to remove harmful tax practices, sources said that there was a likelihood of the Indian government asking for an amendment in the double tax agreement to make capitals gains of the foreign companies registered in Mauritius, taxable in India. Powered by YOU MAY ALSO WANT TO READ:
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