The document discusses the history and controversies surrounding the Indo-Mauritius Double Taxation Avoidance Treaty (DTAT). Key points:
- The 1983 DTAT between India and Mauritius exempted capital gains tax for Mauritius residents on profits from selling shares of Indian companies. This made Mauritius an attractive jurisdiction for foreign investment in India.
- However, the DTAT has been controversial as some accuse Mauritius of being used as a "tax haven" where funds can be "round tripped" back to India to avoid capital gains taxes. There have been ongoing efforts by India to amend the DTAT.
- Recent court rulings in India have aimed to prevent
“While looking at the prospect of setting-up business in India, it would be careful to see what all options are available to a new entrepreneur. Before setting-up a business in India, an entrepreneur generally faces with the following important questions: Which form of business to set-up, Where to set-up, How to set-up, what are post set-up compliances?”
“In case you are a Foreign National/ resident and are planning to set up your business either independently or in Joint Venture with an Indian Party, it is necessary to check the Foreign Direct Investment policy of India before taking any decision.”
StartBizIndia explaining the Procedure and Legalities to Start a Business in India
The Delhi high court, in a leading judgement delivered on 3rd June, 2016, has declared service tax audit being conducted by Central Excise and Service tax department as ultra virus, in the matter of Mega Cabs Vs UOI. The matter was argued by Mr. J.K. Mittal, FCA as advocate of the petitioner.
Make in india – a formidable step in right directionNeha Sharma
Make in India campaign of Prime Minister Narendra Modi has evoked lots of attention all over the world. Prospective investors from China, Japan, USA etc are eagerly watching changes being made in the directions of investment liberalization . There is no doubt that with this PM has taken a major initiative to bring Indian and International Corporate Sector on one platform to aggressively boost industrial production and growth in India.
What is Rajiv Gandhi Equity saving Scheme 2012 (RGESS) and its objective?
A tax-saving scheme launched by the Government of India with the objective to encourage the flow of savings and improve the depth of domestic capital market. The Scheme also aims to promote an 'equity culture' in India and is also expected to widen the retail investor base in the Indian securities markets.
Nidhi company rules 2014 an analysis w.r.t. nidhi company registrationEquiCorp Associates
With the implementation of new rules for operations of Nidhi Company, into effect from April 01, 2014, what will be fate of the public deposit schemes? How these Rules, 2014 are going to impact the Indian Financial Sector, especially Nidhi Companies in India? Nidhi Companies are created mainly for cultivating the habit of thrift and savings amongst its members. The amount of business conducted by Nidhi Companies is not as big as commercial banks or deposit taking Non-Banking Finance Companies. Nidhi Companies are highly localized and mostly single office institutions. They are also referred to as mutual benefit societies, because they accept deposits and give loans to only their own members; and membership is limited to individuals.
The BJP Government is on the verge of completing a year and has now stabilised. Major economic initiatives and actions are emerging for a high growth oriented economy.
“While looking at the prospect of setting-up business in India, it would be careful to see what all options are available to a new entrepreneur. Before setting-up a business in India, an entrepreneur generally faces with the following important questions: Which form of business to set-up, Where to set-up, How to set-up, what are post set-up compliances?”
“In case you are a Foreign National/ resident and are planning to set up your business either independently or in Joint Venture with an Indian Party, it is necessary to check the Foreign Direct Investment policy of India before taking any decision.”
StartBizIndia explaining the Procedure and Legalities to Start a Business in India
The Delhi high court, in a leading judgement delivered on 3rd June, 2016, has declared service tax audit being conducted by Central Excise and Service tax department as ultra virus, in the matter of Mega Cabs Vs UOI. The matter was argued by Mr. J.K. Mittal, FCA as advocate of the petitioner.
Make in india – a formidable step in right directionNeha Sharma
Make in India campaign of Prime Minister Narendra Modi has evoked lots of attention all over the world. Prospective investors from China, Japan, USA etc are eagerly watching changes being made in the directions of investment liberalization . There is no doubt that with this PM has taken a major initiative to bring Indian and International Corporate Sector on one platform to aggressively boost industrial production and growth in India.
What is Rajiv Gandhi Equity saving Scheme 2012 (RGESS) and its objective?
A tax-saving scheme launched by the Government of India with the objective to encourage the flow of savings and improve the depth of domestic capital market. The Scheme also aims to promote an 'equity culture' in India and is also expected to widen the retail investor base in the Indian securities markets.
Nidhi company rules 2014 an analysis w.r.t. nidhi company registrationEquiCorp Associates
With the implementation of new rules for operations of Nidhi Company, into effect from April 01, 2014, what will be fate of the public deposit schemes? How these Rules, 2014 are going to impact the Indian Financial Sector, especially Nidhi Companies in India? Nidhi Companies are created mainly for cultivating the habit of thrift and savings amongst its members. The amount of business conducted by Nidhi Companies is not as big as commercial banks or deposit taking Non-Banking Finance Companies. Nidhi Companies are highly localized and mostly single office institutions. They are also referred to as mutual benefit societies, because they accept deposits and give loans to only their own members; and membership is limited to individuals.
The BJP Government is on the verge of completing a year and has now stabilised. Major economic initiatives and actions are emerging for a high growth oriented economy.
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956/2013 and is engaged in the business of loans and advances, deposits, acquisition of shares stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. To register NBFC in India, the Company must have approval from Reserve Bank of India.
With the recent crackdown on Sahara, PACL etc. by SEBI and closure of their business after the Saradha scam have collapsed the trust of small investors and proven to be the tip of the iceberg for deposit taking companies such as Nidhi Companies, Multi-state Credit Co-operative Societies, NBFCs etc. engaged in collection of public deposit. Shall our government ban all these kinds of deposit taking companies from our financial system? What should be the business structure of the deposit taking companies? What are the different aspects which deposit taking companies should be aware before commencing their venture? Does failure to comply with legal compliance can make your business as a ponzi scheme? What are different types of deposit taking companies and their respective regulators along with their licenses/approvals and registration?
Raghu Babu Gunturu (Co-founder & Partner - R & A Associates & Samisti Legal) made this presentation at TatXpo2019 in Sydney on 27 Aug 2019. The presentation covers, how India made various moves to see how its very attractive destination to make investments and to do easy business with.
http://www.rna-cs.com
https://www.samistilegal.in
"Humility will teach you knowledge, arrogance will teach you ignorance. If you think you know it all, you have learned nothing" Hi good morning, attached today's newsletter 01.09.2020. great day ahead
Guide for Foreign Investors Wanting to Seek Relief under Their Country's Inve...Anil Chawla
This comprehensive Guide is useful for foreign companies who have invested either in an Indian company or in an Indian venture and are facing trouble due to some action by either Government of India or by any state government or by any other government body. The Guide includes Frequently Asked Questions, Selected Sample Cases and details of key persons involved in international investment arbitration.
Guide for Indians Wanting to Seek Relief under India's Investment Treaty with...Anil Chawla
This comprehensive Guide is useful for Indians (including Non-Resident Indians) who have invested either in a foreign company or in a foreign venture and are facing trouble due to some action by either Government of that country or by any provincial government or by any other government body. The Guide includes Frequently Asked Questions, Selected Sample Cases and details of key persons involved in international investment arbitration.
The initiatives proposed by honourable Finance Minister in his budget speech on February 28, 2016 to effectively deal with the problem of black money, which eats into vitals of our society and economy, are highly commendable. The measures initiated by the government in the last nine months to bring back the black money in Swiss Banks has already brought very fruitful results and the names and the details of possible offenders have already been disclosed to Special Investigation Team set up by honorable Supreme Court.
This is a short article that I have made for Ind AS. I tried to do it in my own language but I have completed it with the help of internet and praveen sharma sir.
Newsletter on daily professional updates- 09/06/2020CA PRADEEP GOYAL
“The more knowledge you have on a certain topic,
the more equipped you are to deal with it."
Here is your Daily dose of professional updates 09.06.2020
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956/2013 and is engaged in the business of loans and advances, deposits, acquisition of shares stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. To register NBFC in India, the Company must have approval from Reserve Bank of India.
With the recent crackdown on Sahara, PACL etc. by SEBI and closure of their business after the Saradha scam have collapsed the trust of small investors and proven to be the tip of the iceberg for deposit taking companies such as Nidhi Companies, Multi-state Credit Co-operative Societies, NBFCs etc. engaged in collection of public deposit. Shall our government ban all these kinds of deposit taking companies from our financial system? What should be the business structure of the deposit taking companies? What are the different aspects which deposit taking companies should be aware before commencing their venture? Does failure to comply with legal compliance can make your business as a ponzi scheme? What are different types of deposit taking companies and their respective regulators along with their licenses/approvals and registration?
Raghu Babu Gunturu (Co-founder & Partner - R & A Associates & Samisti Legal) made this presentation at TatXpo2019 in Sydney on 27 Aug 2019. The presentation covers, how India made various moves to see how its very attractive destination to make investments and to do easy business with.
http://www.rna-cs.com
https://www.samistilegal.in
"Humility will teach you knowledge, arrogance will teach you ignorance. If you think you know it all, you have learned nothing" Hi good morning, attached today's newsletter 01.09.2020. great day ahead
Guide for Foreign Investors Wanting to Seek Relief under Their Country's Inve...Anil Chawla
This comprehensive Guide is useful for foreign companies who have invested either in an Indian company or in an Indian venture and are facing trouble due to some action by either Government of India or by any state government or by any other government body. The Guide includes Frequently Asked Questions, Selected Sample Cases and details of key persons involved in international investment arbitration.
Guide for Indians Wanting to Seek Relief under India's Investment Treaty with...Anil Chawla
This comprehensive Guide is useful for Indians (including Non-Resident Indians) who have invested either in a foreign company or in a foreign venture and are facing trouble due to some action by either Government of that country or by any provincial government or by any other government body. The Guide includes Frequently Asked Questions, Selected Sample Cases and details of key persons involved in international investment arbitration.
The initiatives proposed by honourable Finance Minister in his budget speech on February 28, 2016 to effectively deal with the problem of black money, which eats into vitals of our society and economy, are highly commendable. The measures initiated by the government in the last nine months to bring back the black money in Swiss Banks has already brought very fruitful results and the names and the details of possible offenders have already been disclosed to Special Investigation Team set up by honorable Supreme Court.
This is a short article that I have made for Ind AS. I tried to do it in my own language but I have completed it with the help of internet and praveen sharma sir.
Newsletter on daily professional updates- 09/06/2020CA PRADEEP GOYAL
“The more knowledge you have on a certain topic,
the more equipped you are to deal with it."
Here is your Daily dose of professional updates 09.06.2020
In a move to further rationalize and liberalise the overseas investment central Government and Reserve Bank of India notified Foreign Exchange Management (Overseas Investment) Rules, 2022 and Foreign Exchange Management (Overseas Investment) Regulations, 2022 respectively on 22 Aug 2022.
The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics. Immense clarity on Overseas Direct Investment and Overseas Portfolio Investment has been brought in and various overseas investment related transactions that were earlier under approval route are now under automatic route, significantly enhancing "Ease of Doing Business".
To discuss the ongoing changes in the Indian Economy, Laws and Policies which are catalyzing the process of India becoming an attractive investment destination and to walk through the process of "Doing Business in India”.
Mergers_ Tool to Survive the Second Wave of Covid19 3.pdfmyLawyerAdvise
One of the main objectives of an entity is GOING CONCERN. Many business organisations shut down as a result of covid due to lack of resources in operating their routine transactions. The most suitable solution for small scale businesses post covid is merger. Mergers will lead to expansion of resources, retention of employment, fund rotation, adequate balance of demand and supply etc. As the firms emerge from the pandemic, mergers would be the best way to come out of the financial stress for small businesses. It will help leaders gain economies of scale or at least the potential to run more efficiently. Once the economy recovers and accelerates out of recession, the small businesses can take advantage of the environment to execute its strategic acquisition agenda and to position the business to exceed industry-average growth. Mergers are a great way to lock down your business and create job opportunities, allowing customers to access your products and services. It will be a mutually beneficial situation
GIFT city – Gujarat International Finance Tec-city is an ambitious project under the act of Special Economic Zone, 2005 that is aimed at the transformation of India into a global financial hub, rivaling the likes of other leading countries. In the unimaginary location in the state of Gujarat, it represents India’s vision of creating a world-class financial center by serving all the financial services to attract both domestic as well as international businesses.
| Foreign Direct Investment | Foreign Direct Investment and Pakistan | Featur...Ahmad Hassan
introduction to foreign direct investment, definition and forms of foreign direct investment, features of foreign direct investment policies-Pakistan, investment policies of Pakistan, challenges to foreign direct investment in Pakistan, no go areas for foreign direct investment in Pakistan
The 2015 budget had long list of expectations. On one hand; the Government has addressed major issues surrounding the foreign investors which would certainly boost capital market inflows and revive the private equity industry (by deferring GAAR by 2 years and clarifying Permanent Establishment & Indirect Transfer of Assets). On other hand; it has just rationalized the subsidies. Probably as we see growth coming in and more job creation; subsidy burden can be better dealt with by the Government. Though there are no direct benefits for the middle class. However incentives have been introduced to encourage savings. These savings are expected to fuel the infrastructure and other investment plans laid out by the Government. Certainly Foreign investors have a reason to cheer for this Pro Business; Pro Growth Government budget.
INVESTMENT BY A FVCI REGISTERED UNDER SEBI; TRAI SHOW CAUSE NOTICE TO AIRTEL, VODAFONE AND IDEA; RBI POLICIES ON FOREIGN INVESTMENT IN “OTHER FINANCIAL SERVICES; SEBI MANDATES FREEZING OF PROMOTERS’ DEMAT ACCOUNTS ON NON-COMPLIANCE WITH CERTAIN PROVISIONS OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015; RBI POLICIES ON REVIEWS OF SECTORAL CAPS; MCA TO ESTABLISH A STEERING COMMITTEE TO CONDUCT ITS OWN NATIONAL CORPORATE SOCIAL RESPONSIBILITY AWARD
India Union Budget 2015 - An Overview | A BDO India PublicationOperations BDO
The Honourable Finance Minister of India, Mr. Arun Jaitley announced the most inclusively developmental budget for India for the coming fiscal.
Co-operative federalism sharpening the focus on ‘Ease of Doing Business in India’ alongside strengthening domestic macroeconomic fundamentals are the cornerstones of the Budget.
Setting national priorities in perspective with an aim of fiscal consolidation through a host of reforms and a tighter policy framework gives India Inc., much to look forward to.
BDO India LLP brings together an overview of key changes set out in the Union Budget in their proprietary publication INDIA UNION BUDGET 2015 – An Overview.
India Union Budget 2015 - An Overview | A BDO India Publication
Yudhist Singh (1)
1. from any tax liability arising from
capital gains.
In 1994, the Central Board for
Direct Taxes re-affirmed that a resi-
dent of Mauritius deriving income
from alienation of shares of an In-
dian Company would be liable for
capital gains only in Mauritius and
would face no capital gains liabil-
ity in India. This was followed by a
circular issued in 2000 stating that
a certificate of residence issued by
the Mauritius tax authorities would
be sufficient evidence for accepting
for foreign investors in 1992 when
Mauritius passed the Offshore
Business Activities Act, providing
for foreign companies to register
in the island nation for investing
abroad. Simultaneously, Mauritius
abolished capital gains tax for in-
vestors residing in Mauritius. This
included the gains made on the sale
of shares of Indian companies by
investor’s resident in Mauritius. By
doing so, they would not be taxed in
India under the DTAT and since all
capital gains tax had been abolished
in Mauritius, they were exempted
I
n 1983, India signed a bi-
lateral agreement known as
the Indo-Mauritius Double
Taxation Avoidance Treaty
(“DTAT”) with Mauritius removing
taxes on gains made by residents in
Mauritius on disposal of assets
within the territory of India under
Indian taxation laws. Provisions
of the DTAT, although signed, re-
mained dormant for almost a dec-
ade until in 1992, the Government
of India permitted Foreign Institu-
tional Investors to enter India. The
DTAT effectively became beneficial
Mauritius
7th Heaven or Tax Haven?
Zoom In
The need of the hour is to overcome the shortcomings of the DTAT to
make it far more transparent for legitimate Indian companies looking to
raise foreign capital through this route. The Government should put in
place mechanisms by which it can monitor the funds coming in through
these channels.
28 | Jan 2011 | LegalEra | www.legalera.in
Yudhist Singh
2. incorporated in order to prevent
the round tripping of funds. In Oc-
tober 2006, the Mauritian Govern-
ment declared that it would tighten
the noose on the issuance of Tax
Residence Certificates, which would
be issued for a period of one year at
a time. In 2007, The Financial Ser-
vices Act (“FSA”) came into exist-
ence and was enforced in Mauritius.
This provides for what is known in
Mauritius as a global business com-
pany (“GBC”). The FSA 2007 defines
a GBC “as a resident corporation
which proposes to conduct business
outside Mauritius. GBCs are set up
under the Companies Act 2001 and
licensed under the Financial Ser-
vices Act 2007”. The FSA broadly
establishes two categories of GBC
approach to deal with companies
trying to avoid the paying of capital
gains taxes in India. The Bombay
High Court's recent judgment dis-
missing Vodafone's $1.7 billion tax
plea in the Hutchison Essar acquisi-
tion case sends a strong message to
several companies that have been
trying to escape their tax liability by
rerouting their investments through
tax havens. The High Court in its
judgment laid down that these com-
panies cannot escape paying taxes
on the transfer of capital which has
been valued and has a controlling
interest in India.
This was not the first time a land-
mark judgment had been passed in
this regard. Since 2002 the DTAT
has come under fire from the Indian
Tax Authorities and has since been
highlighted in the news frequently
specially due to a public interest
litigation in the Supreme Court of
India challenging the validity of
the DTAT. The Government of India
has repeatedly put pressure on the
Mauritian Government to make
it more stringent for companies
to set up shop for the purpose of
overseas investment focused on
India. In 2005, India entered into a
double taxation treaty with Singa-
pore, which has to a great extent re-
moved Mauritius’s DTAT advantage.
The difference between the DTAT
and the Singapore treaty was that
the Singapore treaty provides for
a more transparent and stringent
route of investment into compa-
nies listed only on a recog-
nized stock exchange
having a total annual
expenditure criterion
(in the 24-month pe-
riod from the date
of the capital
gains arising).
These pro-
visions
had been
specifically
residence status, as well as benefi-
cial ownership, for the purposes of
applying the DTAT.
Turbulent Past
However, this staggering growth has
been riddled by heavy controversy
and has been a focal point of debate
over the last two decades. Mauritius
has been repeatedly accused of be-
ing used as a tax haven for foreign
investors re-routing their invest-
ments into India, leading to enor-
mous tax losses for the country. An
article published in a national daily
earlier this year claims that India
is loosing upwards of Rupees Two
Thousand Crores annually from the
Mauritius investment route alone.
To add to the controversy, Mauritius
has been maligned for being used as
a hub for a process known as “round
tripping”. Round tripping is a mech-
anism via which nationals of one
country reroute their unaccounted
funds parked abroad through the
benefits provided by a tax haven i.e.
funds of an Indian National stashed
abroad can be brought into India
through Mauritius in the form of
foreign investment with added tax
benefits under the DTAT.
Various news articles over the years
have even alleged that vested inter-
ests of Indian political personalities
and several prominent Indian busi-
nessmen are involved in the rerout-
ing of unaccounted funds through
the Mauritius route. It is claimed
that despite rumblings from Indian
Tax authorities, loopholes continue
to exist in the Mauritius route of
investment.
Over the years, the Government of
India, especially the Central Board
for Direct Taxes (“CBDT”) has made
repeated efforts to revisit and cure
the shortcomings of the DTAT. More
recently,inthewakeofthelandmark
Vodafone judgment, the Indian judi-
ciary has taken a more ‘hands on’
Jan 2011 | LegalEra | www.legalera.in | 29
Yudhist Singh
BBA LLB
Associate, Fox Mandal Little
3. FDI has helped the country sustain
a high growth rate and become glo-
bally competitive.
According to one school of thought,
the DTAT has been more of a boon
to India creating a favorable chan-
nel for foreign investment, which
would have otherwise been lost to
countries with a more favorable tax
regime. Statistics tend to support
this data. The inflow of funds from
Mauritian companies itself has been
far greater than investment from
any other country contributing sig-
nificantly to the “India shining” im-
age. They feel that the DTAT would
be more beneficial than a deterrent
for India’s economic growth in the
long-term perspective.
Over the last decade, India has seen
severalofitsfinanceministersspeak
up in defense of the DTAT. As early as
2004, on reworking the DTAT with
Mauritius, P. Chidambaram had told
audited in Mauritius;
Further, a GBC2 (GBC Category 2
Company) was required to have
at all times a ‘Registered Agent’
in Mauritius to monitor all opera-
tions (only a Management Compa-
ny based in Mauritius qualifies for
the same).
Reformative Present
Around January 2007, talks
emerged between Indian and Mau-
ritian officials trying to revamp and
improve (tweak) certain provisions
of the DTAT. In September that year
an Indian Government official had
stated “We are proposing to bring
the DTAT with Mauritius on a par
with the DTAA of Singapore. The
DTAA with Singapore has includ-
ed additional clauses to check the
round tripping of investments.”
Over the last decade, the role of
FDI in the Indian economy cannot
be undermined. A steady inflow of
companies, which may be formed in
Mauritius. One of the reasons behind
the concept of GBCs was to increase
that transparency of companies es-
tablishing themselves in the island
nation looking to invest abroad.
The criterion laid down for the is-
sue of a GBC License included the
following:
The GBC must:
• have or has at least two
directors, resident in Mauritius,
of sufficient caliber to exercise
independence of mind and
judgment;
• maintain at all times its
principal bank account in
Mauritius;
• keep and maintain, at all times,
its accounting records at its
registered office in Mauritius;
• prepares or propose to prepare
its statutory financial statements
and causes or proposes to have
such financial statements to be
30 | Jan 2011 | LegalEra | www.legalera.in
Finance Minister of India - P. Chidambaram
4. companies looking to raise foreign
capital through this route. The Gov-
ernment needs to set up mecha-
nisms by which it can monitor the
funds coming in through these
channels more closely.
The 2005 treaty entered into be-
tween Singapore and India serves
as a good example of how to im-
plement these necessary changes.
Provisions may be inserted into the
DTAT in order to allow investments
being exempted under the DTAT
only into bonafide listed companies
with a minimum annual expendi-
ture criterion for each financial
year. An audit of these companies
should be made mandatory on an
annual basis failing which the com-
panies would no longer be eligible
to claim exemption under the DTAT.
The Singapore Treaty contains the
following clause, which enumerates
whether a Company in India is bon-
afide or not. It states as follows:
*A resident of a Contracting State
is deemed not to be a shell/con-
duit company if:
(a) it is listed on a recognized stock
exchange of the Contracting State;
or
(b) its total annual expenditure on
operations in that Contracting State
is equal to or more than $200,000 or
Indian ` 50,00,000 in the respective
Contracting State as the case may
be, in the immediately preceding
period of 24 months from the date
the gains arise.
A similar clause when inserted
into the DTAT would prevent ‘shell’
companies from rerouting funds
through the Mauritius route bring-
ing the DTAT at par with the Indo-
Singapore DTAA.
l
under the scanner. Mr. Milan J N
Meetrabhan, Chief Executive of the
Financial Services Commission of
Mauritius has also said that if a com-
pany is found to be “round tripping”
funds into India, its license in Mau-
ritius would be revoked
immediately. An annual
audit of Mauritius-based
entities investing in India
has also been made man-
datory. Meetrabhan fur-
ther stated that during
the first seven months
of the current financial
year, nearly $8 billion of
the $18 billion FDI flow-
ing into India came from
Mauritius.
The Mauritian Govern-
ment has also taken
considerable steps to
rectify its tainted image
as a tax haven in India.
As recently as January
2010, Vice Prime Minister
Ramakrishna Sithnaen,
who holds the portfolios
of finance and econom-
ic empowerment, was
quoted as saying during his visit to
India, “Mauritius is definitely not a
tax haven”. Sithnaen further stated
that financial services formed only
12.5 percent of Mauritius’s gross
domestic product. He claimed that
Mauritius has suo moto tried to
prevent round-tripping and till date
no case of round-tripping had been
brought forward and proved.
Clearly, the way forward lies in a
more pro-investment approach for
India. A withdrawal or suppression
strategy from the DTAT is definitely
not a viable or a positive solution in
the long run.
The pertinent question here
remains on how to amend and ulti-
mately cure the shortcomings of the
DTAT in order to make it far more
transparent for legitimate Indian
Parliament: This is not a purely
economic issue. There are political
and diplomatic implications. We are
in consultation with the Ministry of
External Affairs and can proceed on
this cautiously having regard to our
good relations with Mau-
ritius...
What Mr. Chidambaram
said seems to hold water.
India shares a long and in-
timate history with Mau-
ritius. Majority of Mauri-
tius’ population is said to
be of Indian origin. India
established its diplomatic
relations with Mauritius
as early as 1948 shortly
after gaining Independ-
ence and has successfully
maintained cordial rela-
tions between the two
nations ever since. As far
as taxation laws are con-
cerned, both Mauritian
and Indian tax laws share
a common origin of com-
mon law.
In a landmark judgment pertaining
to the DTAT in 2004, the Supreme
Court laid down as follows:
“The principles adopted in interpre-
tation of treaties are not the same as
those in interpretation of a statutory
legislation. An important principle
which needs to be kept in mind in
the interpretation of the provisions
of an international treaty, including
one for double taxation relief, is that
treaties negotiated and entered into
a political level and have several
considerations as their bases”.
The Way Ahead …
The Mauritian Government has re-
cently shown its willingness and has
made efforts to once again revisit
the 1983 Treaty. January 2010 has
seen the Financial Services Commis-
sion of Mauritius bring all Mauritius
based companies investing in India
Jan 2011 | LegalEra | www.legalera.in | 31
“The principles
adopted in in-
terpretation of
treaties are not the
same as those in
interpretation of a
statutory legisla-
tion. An important
principle which
needs to be kept
in mind in the
interpretation of
the provisions of
an international
treaty, including
one for double
taxation relief, is
that treaties nego-
tiated and entered
into a political level
and have several
considerations as
their bases”.