India and Mauritius have agreed to push forward their negotiations for a long pending revision of Double Taxation Avoidance Treaty (DTAT), asserting that their objective is to prevent the “abuse” of the convention.
Prime Minister Narendra Modi and his Mauritian counterpart Sir Anerood Jugnauth expressed this resolve during their talks held at Port Louis, here on last night even as India offered USD 500 million concessional line of credit to the island nation for key infrastructure projects.
Negotiations to amend the bilateral tax treaty have been hanging fire for a long time amid India’s apprehensions that it is being misused to route unaccounted money and evade taxes.
In his response, Jugnauth said the Preferential Trade Agreement signed in August 2006 to further enhance market access should be reviewed and that the two countries have agreed on the way forward.
Addressing a joint news conference with Modi, Jugnauth said he had risen with the Indian Prime Minister issues related to the Mauritius-India Double Taxation Avoidance Agreement (DTAA).
“We appreciate that already India postponed the consideration of the GAAR until 2017. However, we have stressed on the initiatives taken by Mauritius to build substance within our offshore jurisdiction. I have requested PM Modi to give his full support on the DTAA as it is of prime importance for our global business sector,” he said.
Modi in his response said the two sides agreed to continue negotiations for a revised treaty based on shared objectives to prevent the “abuse” of the convention.
“Over the past few years, we have discussed revision of Double Taxation Avoidance Convention. This is based on our shared objective of preventing abuse of the Convention, while enabling Mauritius to benefit fully from this arrangement. We have agreed to continue this discussion,” PM Modi said.
“However, I have assured Prime Minister that we will do nothing to harm this critical sector of one of our strongest strategic partners in the world,” he said.
Prime Minister Narendra Modi also said that Mauritius offered India cooperation on information exchange on taxation.
“I also conveyed our deep appreciation for the support and cooperation offered by Mauritius on information exchange on taxation,” PM Modi said.
The (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.
Mauritius is one of the top sources of Foreign Direct Investment into India.
During the last Financial year, India attracted USD 4.8 billion from Mauritius. Between April-September this fiscal, there has been an inflow of USD 4.9 billion into India.
Finance Minister Arun Jaitley recently said Mauritius is yet to agree to certain proposals for revising the treaty.
“India has made certain proposals for revision of the DTAA to end round tripping and other aspects. Mauritius is yet to agree to such revision,” he told Rajya Sabha.
At his press conference here, PM Modi said, “I consider our security cooperation to be a cornerstone of our strategic partnership. Our agreement on cooperation in Ocean Economy is an important step in deepening our scientific and economic partnership.”
The five pacts signed included an MoU between the two countries in the field of ‘Ocean Economy’ which will provide an extensive framework for cooperation, a novel and critical area of sustainable development in the Indian Ocean Region.
The other agreements signed were a MoU for the improvement in sea and air transportation facilities at Agalega Island of Mauritius, MoU on cooperation in the field of traditional system of medicine and homoeopathy, programme for cultural cooperation between 2015-18 and a pact on import of fresh mango from India.
India also offered to establish a second cyber city in Mauritius after it helped the island set up the first one a decade ago.
PM Narendra Modi also welcomed Mauritius’ decision to make India its preferential partner in developing its security capabilities.