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Mauritius Awaiting Indian Response To DTA Proposals

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

09 July 2013


The Mauritian Foreign Affairs Minister has said that the Government is prepared to "walk the extra mile" to conclude the long-running saga over its double tax agreement (DTA) with India.

The existing treaty was signed in 1982, but the Indian Government has been pushing for changes to its terms for a number of years. In particular, concern has been expressed regarding the capital gains clauses that permit both resident Indian and foreign investors to route investment into India via Mauritius, and take tax-free gains.

According to Arvin Boolell, the Mauritian Government submitted its proposed reforms to the DTA at the last joint working group of ministers, which took place in March. He explained that the Government "is willing to consider [the] insertion of [an] appropriate clause in the treaty to prevent any perceived abuse," and is happy to plug any loopholes that have arisen.

It is not, however, prepared to go ahead with changes to the capital gains provisions, for fear that the certainty and stability of the treaty would be affected.

India has yet to respond to the offer, or set a date for the signature of a new tax information exchange agreement (TIEA). Boolel said that the Mauritian Finance Minister is "looking forward" to traveling to India to do so, but is currently "waiting for our good Indian friends to react."

TAGS: compliance | Finance | tax | tax information exchange agreement (TIEA) | double tax agreement (DTA) | tax compliance | India | Mauritius | tax avoidance

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