Mauritius to provide automatic tax info exchange for India
Mauritius to provide automatic tax info exchange for India Ramgoolam, who was here to attend BJP leader Narendra Modi’s swearing-in as Prime Minister yesterday, also said that Mauritius would not allow anybody to abuse or misuse its jurisdiction for any illicit activities.
Seeking to allay apprehensions about Mauritius being used for money laundering activities, its Indian-origin Prime Minister Navin Ramgoolam today said the island nation has decided to provide automatic exchange of tax related information with India. Ramgoolam, who was here to attend BJP leader Narendra Modi’s swearing-in as Prime Minister yesterday, also said that Mauritius would not allow anybody to abuse or misuse its jurisdiction for any illicit activities. Speaking to reporters after a bilateral meeting with Modi this morning, Ramgoolam said he has also invited the Indian Prime Minister to visit Mauritius. On the contentious issue of revision of a tax treaty between two countries, the Mauritius Prime Minister said that “there must be a quick resolution to resolve all issues related to the direct tax avoidance agreement between the two countries”. “We both agreed that there must be quick resolution (on the issues) for certainty, clarity and predictability,” he said. A proposed revision of the tax treaty has been hanging in the balance for a long time and there have been reports that Mauritius was not agreeable to certain suggestions made by India, which has been seeking to make the agreement stronger to check any possible round tripping of Indian funds through the Indian Ocean island nation. The people of Indian descent account for a vast majority (about 70 per cent) of Mauritius population. The current Prime Minister’s father, late Seewoosagur Ramgoolam (also referred as Chacha Ramgoolam) was a leader in Mauritian independence movement and also served as the first Chief Minister and Prime Minister of Mauritius. Seewoosagur Ramgoolam is also known as ‘Father of Nation’ of Mauritius and for leading the Labour Party for the rights of labourers and getting Mauritius independence from the United Kingdom in 1968. Ramgoolam said that Mauritius has made new proposals that allay the concerns of India with respect to the tax treaty. “We expect to sort out the issues related to DTTA very quickly,” he noted. With respect to India’s concerns about Limitation of Benefit (LoB) in the DTAA, he said “we have absolutely no problem” in addressing the issues. Meanwhile, India and Mauritius have decided to have an innovative partnership to strengthen their bilateral relations. In this regard, the Prime Minister’s Office of both countries would set up special cells for effective implementation of ideas, Ramgoolam said. Emphasising that both countries need to go beyond DTAA, Ramgoolam said there is “enormous prospects” in “ocean economy” for India and Mauritius. “It is a win-win situation” for both sides, he added. Without elaborating on steps that could be initiated to tap the potential presented by “ocean economy”, he said that already investments are being made in marine energy. “There are strong ties between India and Mauritius… We want to strengthen, broaden and deepen our relations. We (I and Modi) had fruitful discussions… It is a relation based on shared values and ancestral traditions,” the Prime Minister said. Congratulating Modi for his landmark election victory, he said, “It was an honour and privilege to be invited for the swearing in of Prime Minister Narendra Modi”. Modi knows Mauritius. In October 1998, Modi had come to the country Mauritius along with then HRD Minister Murli Manohar Joshi, he added. Besides Ramgoolam also expressed optimism that Mauritius would come back as the largest source of Foreign Direct Investment (FDI) to India. He was responding to a query on Mauritius slipping to second position behind Singapore in the last fiscal (2013-14 period) as the largest source of FDI. Last fiscal, India attracted USD 5.98 billion in FDI from Singapore, whereas it was USD 4.85 billion from Mauritius. Mauritius has a large population of Indian-origin people, mainly from Bihar who had gone there as labourers in 19th century. The current Prime Minister’s grand father Moheeth Ramgoolam, an Indian immigrant labourer, had gone to Mauritius at the age of 18 in a ship called The Hindoostan in 1896. Once known as the biggest gateway for flow of funds into India, Mauritius has slipped in recent months to second position in terms of quantum of money being brought in by overseas investors into Indian markets, as also in terms of funds coming through FDI route. In terms of funds brought in by foreign institutional investors into the Indian equity and debt markets, the US has overtaken Mauritius, while Singapore is now on top for FDI. The fund flow from Mauritius declined amid concerns about suspected money-laundering though the Indian Ocean island nation, which has been consistently denying these allegations. The Foreign Direct Investment inflows from Mauritius have also fallen sharply on fears of possible re-negotiation of the tax avoidance treaty between the two countries. Foreign investors are also said to be apprehensive that a re-negotiated DTAA would eliminate the tax advantage which the Mauritius investors enjoy, while there are also fears that they may lose tax benefit after introduction of GAAR (General Anti Avoidance Rules) provisions, which seek to check tax avoidance by investors routing their funds through tax havens, will come into effect from April 1, 2016 in India. Mauritius has been one of the biggest sources of FDI into India, which attracted inflows of USD 77.77 billion FDI from that country between April 2000 and January 2014.