Mauritius Qualified as Tax Haven in White Paper on Indian Dirty Money

The Mauritian financial services sector is caught in the vortex of a series of drastic measures and decided upon by the Indian government in order to lead a national struggle against three scourges that plague the Indian society namely, corruption, laundering money and tax evasion. 

After the bills, the Lokpal Bill, the Whistle Blowers Bill, Direct Taxes Code (DTC) Bill with a watermark, the General Anti-Avoidance Rules (GAAR), the Indian government has to use a new instrument parliamentary constitutes a major headache for operators in the financial services sector in Mauritius and the Government. 

This is a White Paper on the Black Money, translate an economy fueled with money that has escaped the constraints of the policy of state tax. This document was filed May 21, 2012 on the table of Lok Sabha, the lower house parliamentary system of Great Peninsula by Pranab Mukherjee, Indian Minister of Finance. 

A government uses a white paper where he intends to come forward with firm steps to solve a particular problem.The paper then proposes lines of inquiry leading to extensive national debates. Using a white paper shows the determination of the Government to introduce new legislation to resolve the problem. In other words, the Indian government wants to provoke a national debate on dirty money before coming up with appropriate legislation. 

In the context of this paper, the Indian government casts a big cloud on the credibility of Mauritius and to a lesser extent, Singapore. The argument for India is based on the fact that it is unthinkable that an economy as limited as that of Mauritius, has been the purveyor of 41.80% of total foreign investments which were intended from April 2000 and March 2011. 

"It is obvious that these investments go through these courts in order to avoid the obligation to pay taxes and / or to conceal the identity operators in the eyes of authorities to collect taxes. Many of these operators are Indian nationals. So they invested in their own company by using tricks of round tripping ", it is specified in the 'White Paper'. 

An operation circular (round tripping) is to benefit from tax exemptions for out of funds or property of one country and then reintroduce them in the same country. In the financial sector in India, a case of circular operation occurs when the citizens of this country from enjoying the benefits of the Convention for the avoidance of double taxation for directing funds to where Mauritius 'capital gains' are not taxable. They then enter into partnership with operators and go invest in their country of origin. 

Arvin Boolell, Minister of Foreign Affairs, reacted strongly against this thinly veiled perception to the effect that transparency is not a virtue of the Mauritian financial services sector. "Our jurisdiction is healthy. Operations in our financial services sector is conducted more transparently, "he told our colleagues at Radio One. 

Kee Chong Li Kwong Wing, parliamentary spokesman for the Mauritian Militant Movement (MMM) on economic and financial issues and also the operator in the financial services industry, believes that Mauritius has to show white legs in the fight against corruption, predisposing to provide information when its credibility is in balance and transparency. 

"The government is mistaken if he believes that concern for India is not based on real concerns. India, and this applies not only that nation only, has reason to doubt the credibility of Mauritius in terms of his will to fight corruption, tax evasion and laundering money. Several offenses associated with these scourges have involved one way or another Maurice. Our country has unfortunately not been demonstrating its credibility. The most recent is the transaction of rosewood from Madagascar. The posture of the government after the seizure of a shipment toward China does not honor the country.Suspicions of telephone calls, refusal to provide appropriate information, the allegations of attempts to close the deal under certain arrangements do not favor the image of transparency of the country wants to project itself same. We missed a golden opportunity to demonstrate our credibility " 

Hawabhay Kamal, president of the Association of Trust and Management Companies, says he is not able to understand where India is coming from. He argues that the Indian authorities have only to request the competent authorities to dispel any suspicion that it nourishes against the Mauritian financial services sector.