By Thursday, October 20, the former Minister of Finance, Rama Sithanen, announced the forthcoming opening of negotiations on the offshore. This news was confirmed today by the Indian press.
The reaction in the offshore industry in Mauritius tends to favor a possible revision of the Treaty. "Gone are the days of sit on the fence and adopt the ostrich policy. There is much uncertainty in the Indian market and this is not good for business. It feels slow. It is time to renegotiate and to end this uncertainty, " says Kamal Hawabhay, president of the Association of Trust and Management Companies (ATMC) offshore.
In any case, there is the Direct Tax Code being prepared in India and this law will override tax treaties. India can get what she wants without having to negotiate anything. It is better to play the game and hoping to negotiate something out rather than wait for a unilateral decision of the Great Peninsula, says our interlocutor.
However, Indian newspapers appear uncertain about the possibility that the issue of capital gains tax is put on the discussions. If this is not on the agenda, the renegotiation of the treaty would be meaningless, some commentators argue.
"For us, everything is on the table for discussion, including the issue of capital gains tax. But ultimately, it will be for negotiators to agree, " says an Indian official.
The issue of capital gains tax is central to the litigation concert on tax treaty between our two countries. As the tax on capital gains is zero in Mauritius is one of the main advantages of Indo-Mauritius treaty. But in India, some circles see this with a jaundiced eye because it would open the door to abuse.
On the other hand, India does not entirely undermine a treaty that serves as a conduit to 40% of foreign investment in the Greater Peninsula.
"India wants to get something accepted discuss hoping we get something too. We must end the uncertainty that is detrimental to business, " concludes Kamal Hawabhay.