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India Responds To Mauritian Tax Proposals

by Mary Swire, Tax-News.com, Hong Kong

29 August 2013


The Indian Government sent its Mauritian counterpart "detailed comments" on the latest proposed changes to their double tax agreement (DTA) as long ago as May, it has emerged.

Finance Minister P. Chidambaram told the Rajya Sabha that the Mauritian negotiating team submitted its recommendations on the DTA's contested Limitation of Benefit Article in April. He added that the Indian Government examined the proposals and replied, but is still waiting for a response.

The existing treaty was signed in 1982, but India has been pushing for changes to its terms for a number of years. In particular, the capital gains clauses have caused discord, as they permit both resident Indian and foreign investors to route investment into India via Mauritius, and make tax-free gains.

In July, two months after India is said to have forwarded its comments, Mauritius' Foreign Affairs Minister Arvin Boolell said that its Government was prepared to "walk the extra mile" to conclude the long-running saga, and was "willing to consider [the] insertion of [an] appropriate clause in the treaty to prevent any perceived abuse." The capital gains tax provisions remained a sticking point, however, with Mauritius fearing that changes could affect the certainty and stability of the DTA.

TAGS: Finance | tax | double tax agreement (DTA) | India | Mauritius | tax avoidance | tax reform

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