Mauritius, India in Talks to Address Tax Treaty Concerns: FSC

Emphasising that the country provides stability and predictability for investors, Mauritius's Financial Services Commission (FSC) sought to allay concerns that the jurisdiction is being used by Indian entities for round-tripping of funds.

"We will defend our stand point that Mauritius is not a tax haven in spite of certain misperceptions," FSC Chief Executive Clairette Ah-Hen told PTI.

Amid concerns of round-tripping of funds through Mauritius, both countries are discussing possible changes to their tax treaty towards addressing India's concerns.

A Joint Working Group, which has already held few rounds of discussion on tax treaty, is expected to meet later this month or early in October, Ah-Hen said.

"Discussions are continuing on the revised DTAA or new tax information exchange agreement and both countries have shown great interest in this regard," the FSC chief said.

Negotiations to amend the Indo-Mauritius tax treaty have been hanging for a long time amid India's apprehensions that it is being misused to route unaccounted money and evade taxes.

Round-tripping is usually referred to routing of domestic investments through Mauritius to take advantage of the Double Taxation Avoidance Agreement (DTAA) between the two countries.

While Mauritius says it has strict checks and balances in place, uncertainties over the tax treaty have adversely affected investment flows between the two nations.

Mauritius is one of the top sources of foreign direct investments into India. Last fiscal, FDI from the island nation touched around $ 4.85 billion and the inflows have taken a hit in the recent past.

Noting that Mauritius is recognised as a sound and credible international financial centre, Ah-Hen said the country is fully committed to adopt international norms and standards.

"The jurisdiction offers the predictability and stability which investors are looking for. Mauritius is considered as a model for other jurisdiction in the region," the FSC chief said.

FSC is the integrated regulator for all non-banking financial services and global business sectors in Mauritius, which has been a major route for foreign investments coming into India.

According to Ah-Hen, Mauritius has lower tax rates compared to many other countries as the island nation believes "in simplified tax structure as it encourages people to pay taxes and not indulge in tax evasion activities".

"The FSC Mauritius is committed to the highest standards in international engagement and information sharing with other regional and international counterparts.

As a regulator, we do not compromise on the fact that companies and our licensees must abide by the laws, regulations and rules," Ah-Hen said.

In July, FSC's Indian-origin Chairman Rajeshsharma Ramloll also said that a quick resolution of issues related to Indo-Mauritius tax treaty would not only benefit the two nations but also boost investor confidence and ensure certainty.

Stressing that Mauritius has taken many steps to address India's concerns, he had said the island nation was an economical as well as an efficient route for making investments into India.