Mauritius Seeks To Strengthen Trade Ties With India
by Lorys Charalambous, Tax-News.com, Cyprus
21 November 2003

In his recent visit to India, the Prime Minister of Mauritius Paul Berenger told business leaders at the All India Association of Industries in Mumbai of plans to beef up the double taxation and trade agreements between the two countries.

"We are planning to set up a new institution under the new legislation," Berenger told the gathering. "The proposed mechanism will ensure the required capacity of business and ensure the exchange of information between the two countries. We are soon planning to sign a Memorandum of Understanding (MoU) with the government", he said.

The Prime Minister also spoke of plans to develop the jurisdiction into a regional knowledge hub and promote investment in the field of information technology, amongst other trade sectors.

He told delegates "we invite investments from India in the fields of tourism, textiles especially spinning mill, sugar industry, energy production, ICT sector, etc. We are also planning to develop our country as a regional seafood hub for African countries".

"Ultimately we want to make Mauritius a Cyber Island", added Mr Berenger.

Figures released by the Global Business Institute recently revealed that some $6 billion to $8 billion per year, or one third of India’s total foreign investment, is channeled through Mauritius to take advantage of capital gains tax exemptions. At present, there are around 20,000 offshore businesses registered in the Indian Ocean jurisdiction, of which 6,500 invest directly into India.

The volume of international firms from third countries taking advantage of the tax breaks offered by the treaty has led the Indian government to consider carefully any future double taxation agreements in order to prevent ‘treaty shopping’ following a recent Indian Supreme Court decision to allow foreign firms to continue to benefit from the Mauritian Tax Treaty despite attempts by the tax authorities to limit its application.

.