NDTV, 05 Jul 2012
Mauritius willing to reassess bilateral tax treaty with India
Shweta Rajpal Kohli
Mauritius says it is willing to walk the extra mile to address concerns of Indian tax authorities including reassessing the bilateral tax treaty with India to ensure it isn’t misused.
India has a Double Taxation Avoidance Agreement with Mauritius. Overseas portfolio investors, routing their investments via countries like Mauritius, currently do not pay any tax on short-term capital gains. India has been trying to renegotiate its bilateral tax treaty with Mauritius so that it isn’t misused for round tripping and tax evasion.
Arvin Boolell, Foreign Minister of the island nation, however told NDTV that India’s proposals to bring domestic laws like GAAR has led to tremendous concern and uncertainty and will impact foreign investments into India.
General Anti-Avoidance Rules or GAAR, which was announced in the Union Budget, aims to target tax evaders, partly by stopping Indian companies and investors from routing investments through Mauritius or other tax havens for the sole purpose of avoiding taxes.
Mr Boolell stressed that Mauritius has been co-operating with India.
"Mauritius gave details on Vodafone in less than 7 days," he said.
Under GAAR, Vodafone would have to pay capital gains tax of $2.2 billion for its 2007 acquisition of Hutchison Essar.