Rediff News reported recently that talks between the two sides last month over a change proposed by the Indian government to toughen the residence requirements necessary for Mauritius-based firms to benefit from the tax treaty between the countries, were unsuccessful, despite an offer of financial compensation which was made to the Mauritian authorities.

"An attempt was made, but nothing came of it. India even offered to compensate Mauritius for potential loss of revenue on account of a change to the treaty. Now, there is very little chance of the DTAA being amended for at least a year or so," an unnamed official told the news service.

The Mauritian government, meanwhile, feels that it has already made several concessions to the Indian authorities on this matter, including tightening up rules on the issuance of Tax Residence Certificates, and issuing them for only one year at a time.

In October 2006, Mauritian Minister of Finance, Rama Sithanen Mauritius announced of measures put in place that year that:

"Let me state very clearly that we will collaborate to prevent any alleged misuse of the treaty. But keeping in view historical, cultural, political and diplomatic ties between the two countries we need a global solution that will not penalise Mauritius."

He went on to claim that: "The problem of roundtripping has been eliminated completely."