House Cleaning Modi-Style... Mauritius says ‘NO’ to Shell Companies

Happenings

During his visit to India in June 2015, Mauritius Finance Minister Seetanah Lutchmeenaraidoo stressed on making it difficult for shell companies using a liberal and controversial bilateral tax treaty with New Delhi to evade taxes in India.

During his visit to India in June 2015, Mauritius Finance Minister Seetanah Lutchmeenaraidoo stressed on making it difficult for shell companies using a liberal and controversial bilateral tax treaty with New Delhi to evade taxes in India.

The misuse of the India-Mauritius Double Taxation Avoidance Convention (DTAC) is a matter of concern, and India has been urging Mauritius to jointly rework the DTAC to prevent round-tripping of tax evaded funds from the country.

The proposal to introduce a set of General Anti Avoidance Rules (GAAR) by India is a step to check the menace of tax evasion. Seeking to set the record straight on GAAR, FM Lutchmeenaraidoo said, “People ask me if GAAR is a threat to me (Mauritius). We have to put the question whether GAAR is good for India. GAAR is a sort of ‘control’ and the more one tends to control, the more one loses.”

The island nation’s finance minister laments the fact that job creation in Mauritius has been quite small after the DTAC was signed in 1983.

“The companies, investing in India and operating out of Mauritius would have to create more jobs and integrate with the island nation’s economy,” he said.

“We want investors from India who come to Mauritius to add substance to what they do. We don’t want shell companies and will refuse shell companies because they are of no use to us, no use to India. In fact, we are doing in Mauritius what Prime Minister Narendra Modi is doing here. We are cleaning the house,” Lutchmeenaraidoo added.

Global Fight against Black Money

Mauritius has become a signatory to the multilateral framework that provides mutual administrative assistance on tax matters with India and other countries.

The island nation has signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which is primarily aimed at ensuring greater exchange of tax information among countries to help curb the flow of unaccounted money and assets.

“Mauritius is the seventh member of the African Tax Administration Forum to join the Convention and becomes the 87th jurisdiction participating in this truly global instrument to fight international tax avoidance and evasion,” Paris-based Organisation for Economic Cooperation and Development (OECD) said.

Developed by OECD and the Council of Europe, the convention provides a comprehensive and multilateral framework for exchange of information and assistance in tax collection.

The convention also provides for administrative assistance among tax authorities for information exchange, including automatic exchange, simultaneous tax examination and assistance in the collection of tax debt.

Mauritius has committed to start exchanging automatically in 2017 and has now joined the legal instrument, which once ratified will serve as the basis for implementation of the multilateral agreement.

Go to Content Page

Back to Top

Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

Search