Mauritius decided to provide automatic tax information exchange to India
Mauritius on 27 May 2014 decided to provide automatic tax information exchange to India. The decision was announced by the Prime Minister of Mauritius Navin Ramgoolam after his meeting with Prime Minister of India Narendra Modi.
Navin Ramgoolam was in India to attend the swearing-in ceremony of Narendra Modi as 15th PM of India.
The decision was taken by Mauritius because during last few months the Foreign Direct Investment (FDI) inflows from Mauritius have started drying up on the fears of the impact of General Anti Avoidance Rules (GAAR) and possible re-negotiation of the tax avoidance treaty.
The India-Mauritius DTAA is being revised amid concerns that Mauritius is being used for round-tripping of funds into India even though that country has always maintained that there have been no concrete evidence of any such misuse.
Automatic Tax Information Exchange
Automatic exchange of information involves the systematic and periodic transmission of bulk taxpayer information by the source country to the residence country concerning various categories of income. The categories of income include dividends, interest, royalties, salaries, pensions, etc.
It can provide timely information on non-compliance where tax has been evaded either on an investment return or the underlying capital sum even where tax administrations have had no previous indications of non-compliance.
The proposal for automatic tax information exchange was floated by Organisation for Economic Cooperation and Development (OECD). It was fully endorsed in September 2013 by G20 leaders.
On 13 February 2014 the OECD released the Standard for Automatic Exchange of Financial Account Information that calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
On 6 May 2014, 47 countries including India and Switzerland endorsed Declaration on Automatic Exchange of Information in Tax Matters.