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India Mauritius Agreement

After renegotiating its agreement on double tax evasion with Mauritius in 2016, India has seen some positive developments. First, a brief summary: the essence of the 2016 renegotiation was to close the central loophole that made Mauritius a preferred investment route to India. The loophole was the residence-based tax on capital gains from the disposal of the shares. Shorn of jargon, which means that if a Mauritius-based company invests in shares in a company based in India and then sold those shares and made a profit, they would have to pay capital gains tax in Mauritius. In practice, Mauritius does not collect capital gains tax! This loophole was closed in 2016 and from now on there would be a source-based tax on capital gains. This means that if Mauritius-based companies sold shares in an India-based company, India would collect capital gains tax. Naomi Fowler – India and the renegotiation of its double taxation agreement with Mauritius: an update It`s a bit enigmatic because in 2016, India also renegotiated its agreement on double tax evasion with Singapore in order to close exactly the same loopholes that existed with Mauritius, which was the capital gains-based tax on the sale of shares. Perhaps Singapore`s strengths other than the financial hub, such as the ability of companies to raise funds at comparatively low interest rates, and that an effective dispute resolution system continues to be a preferred place for Indians to start businesses. My award-winning essay, written for a joint competition by the Tax Justice Network and Oxfam International, focused on how India is unable to meet its obligations on children`s rights because it loses huge tax revenues because of certain government policy decisions. These decisions allow for tax abuses and, as is increasingly understood, tax abuses are a human rights issue. Despite these drawbacks, this is a major step forward and certainly a boost to global efforts in the area of tax havens. An intergovernmental tax commission at the UN is now needed more than ever to catalyze these individual efforts and enable coordinated and coherent action against global tax havens.

The Organisation for Economic Co-operation and Development (OECD) convened a multilateral agreement in 2016 to prevent base erosion and profit-shifting. The Convention adopted a multilateral instrument (MLI) to introduce anti-abuse provisions in various DBAs. MLI contains a provision to refuse to protect a DBAA (if the DBAA falls under the MLI) when the main purpose of a trade agreement is to save taxes. It is measured against a primary objective test, which is a minimum standard under MLI. . According to a media report, the Indian government is proposing to amend the existing agreement on the prevention of double taxation between India and Mauritius (“DBAA”). According to media reports, the amendment is proposed in order to avoid the misuse of the benefits of DBAA by management and management companies that have little or no operations in Mauricie. The media report on the renegotiations is a clear contradiction with the Minister of Finance`s clarification of 23 May 2006 that there were no discussions on the renegotiation of DBA A. This treaty was amended after years of negotiations between the two countries.

From 2017, Mauritian investors will gain capital in half of India`s interest rate (7.5%) Taxed. until 2019, after which the full tariff will apply. This actually removes the incentive for tax evaders to move funds through Mauritius, because they are taxed anyway.