Mauritius to act against black money: Finance Minister Seetanah Lutchmeenaraidoo
NEW DELHI: Mauritius has offered to put in place stringent conditions for investors seeking benefits under its tax treaty with India to weed out post-box operations, addressing a key concern of New Delhi that has been attempting to amend the agreement for years.
“We don’t want investors to open shell accounts in Mauritius… We will not allow parking of ill-gotten money in Mauritius. This is the philosophy of the new government,” Mauritius finance minister Seetanah Lutchmeenaraidoo told ET.
Indian investors will have to show their credentials in terms of employment, back-office operations and physical presence to avail of tax treaty benefits. “We do not want the Indian fiscal system to lose,” the minister said. Some entities have used Mauritius to conceal wealth, he said.
“I fully under the position of PM Narendra Modi to fully clean up and make people accountable in India. I am happy that India is doing lot of house cleaning as house cleaning will reduce the number of bad tomatoes who fly abroad to look for safe centres to hide ill-gotten money,” he said. “In fact, we are doing in Mauritius what Prime Minister Modi is doing here. We are cleaning the house.” He pledged full cooperation with the Indian authorities.The minister said a limitation of benefits (LoB) clause would have be formulated keeping in view the size of the Mauritius economy and this couldn’t be identical to the one in the India-Singapore tax treaty. “With Singapore, there is an investment limit of $200,000. We have proposed that this limit should be in accordance with the GDP of Mauritius,” he said, adding that a draft protocol had been given to Indian finance minister Arun Jaitley and its contours will be finalixed when negotiators from both sides meet on June 29-30. Talks between the countries have been stuck on the constituents of the LoB, with India keen to use the Singapore template. Apart from aminimum expenditure of $200,000 in Singapore, this also entails a track record of two years.
The Mauritius finance minister was confident this would be finalised at the upcoming meeting. Lutchmeenaraidoo incidentally had negotiated the Double Taxation Avoidance Convention between the two nations 30 years ago. The island nation has also sought most favoured nation treatment and proposed a free trade agreement between the two countries, he said.Globally, LoB clauses cover minimum investment, local listing, turnover, expenditure and board membership among other in order to prevent tax arbitrage. The India-Mauritius tax treaty provides that capital gains arising in India from investments in the country from the island nation can only be taxed in the latter.
On Lalit Modi
Mauritius said it has not received any request from New Delhi with regard to former cricket administrator Lalit Modi’s investments from the island nation in India. “There has been no request so far on him,” Mauritius finance minister Seetanah Lutchmeenaraidoo said. He said if a request was made the country will provide all the information it has. He said Mauritius had received more than 200 requests for information from India and was also providing data on beneficial ownership. India has also posted a tax officer at the high commission who can seek information from Mauritius. Indian authorities, including the enforcement directorate and income tax departments had begun looking into Modi’s investments in connection with the IPL since 2010.
