The Hindu Business Line : ‘Mauritius has always been a well-regulated jurisdiction’

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‘Mauritius has always been a well-regulated jurisdiction’

The India-Mauritius tax treaty has always been the cynosure of financial planners, on the one side, and policymakers, on the other. Accentuating the attention to Mauritius, a few weeks ago, was the review of the DTAA (double taxation avoidance agreement) or the treaty, in an apparent attempt to plug the gaps. The itinerary of the Chairman of the CBDT (Central Board of Direct Taxes), therefore, recently included a purposeful stop in Mauritius. While the Indian taxman̵ 7;s anxiety to ensure the due collection of revenues is understandable, Business Line connected with Mr KC Li, a former Advisor to the Minister of Finance of Mauritius, and sought his views on the issue.

Mr Li is currently the Chairman of the Association of Trust & Management Companies of Mauritius and also Chairman of the Mauritius International Trust Co. Ltd ( www.mitco.mu ), ‘a professional firm of accountants, lawyers and financial advisors,’ based in Port Louis, Republic of Mauritius. He was earlier the Chairman of the Stock Exchange Commission, which is now integrated into the Financial Services Commission.

“I think that we must look at the current controversy around the DTAA of India with Mauritius in the context of the long-standing special relationship between the two countries,” opines Mr Li, interacting over the e-mail.

Excerpts from the interview:

On the India-Mauritius links.

Let us not forget that Mauritius chose the date of its political independence on the historic day that Mahatma Gandhi started the famous Salt March, i.e., on a 12th of March.

In its struggle for economic independence, Mauritius turned to India for the transfer of intermediate technology, for technical expertise, for supply of machinery, raw materials and foodstuffs, for many of its imports, and India remains our main import supplier until today, with a huge trade balance in its favour, as Mauritius exports practically nothing to India.

On the gains for India.

In trying to attract Indian capital, Mauritius gave special preferences to the likes of Life Insurance Corporation of India, Air India, Bank of Baroda, etc., for participating in our economic development and gave the taxing rights to India on the gains realised on their investments here. Mauritius continues to promote this special economic relationship in the field of exploitation of maritime resources in our territorial waters, which cover a massive area in the Indian Ocean.

I do not need to mention our special political relation with India regarding our resolute stand on the Nuclear Test Ban, Membership of UN Security Council and other sensitive issues.

On the need for a broader outlook.

We cannot therefore look at the DTAA from the narrow view of a purely financial and fiscal consideration arising from a situation of capital glut in the current development stage of India.

On the other hand, India has the same capital gains tax exemption clause in DTAAs with many other countries and has even as late as last year negotiated similar terms with emerging countries.

On the track record of Mauritius.

It is also worth noting that Mauritius has never been blacklisted by any of the international institutions like FATF ( Financial Action Task Force), OECD (Organisation for Economic Co-operation and Development), IMF (International Monetary Fund) and others.

Mauritius has always been a well-regulated jurisdiction, and not a single case of round tripping or money-laundering has ever been proven against us.

On the contrary, Mauritius forms part of the African Union, the Southern Africa Development Community (SADC) and the Common Market of East and Southern Africa (COMESA), which allow us preferential access to the African markets.

The bottom line.

India has every advantage to partner with Mauritius in tapping into the vast potentials of Africa than shooting itself in the foot by branding Mauritius as an ill-famed tax haven, which it is definitely not!

D. MURALI

http://InterviewsInsights.blogspot.com

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