Mauritius Not A Tax Haven, Says Vice Premier

The Vice Prime Minister of Mauritius, Ramakrishna Sithanen, on a visit to India, is concerned that India should not set Mauritius aside for special treatment in its efforts to address tax treaty misuse.

On the agenda for his meeting with India's Finance Minister, Pranab Mukherjee, would have been the tax treaty with Mauritius, which currently provides for exemption of capital gains tax on sales of shares.

According to a written parliamentary answer last year, amendments to this particular treaty were planned by India to "prevent its misuse for avoiding taxes and enhance exchange of information, including banking information."

Other treaties entered into prior to 2004 are also weak in their anti-abuse provisions, the Indian government believes; these include agreements with the Netherlands, Australia, Cyprus, and the US. The parliamentary written answer recorded that 60% of Indian foreign investments in the last year involved countries listed as "tax havens," the main ones cited being Mauritius, Cyprus, and Singapore.

“Mauritius is definitely not a tax haven,” said Sithanen in an address to businessmen. “Financial services form just 12.5% of our gross domestic product.” Although Sithanen, who is also the Finance and Economic Development Minister, promised to cooperate with India in combatting tax evasion, he also said his country would not welcome "fishing expeditions."

More than 40% of the USD80bn foreign direct investment into India in the last 10 years has been routed through Mauritius, because, it is assumed, of tax benefits related to the double taxation treaty.

Sithanen told CNBC-TV18 in an interview that he "would like footprints of Indian investors to become bigger." Sithanen also told Reuters that Mauritius' Financial Services Commission, which is responsible for licensing global businesses, would revoke the licenses of entities which were found to be deliberately attempting to evade Indian tax.

"We have never received any complaint about money laundering. However, there has been a request in the course of the investigation that is being carried out and we have submitted all the information that we have," Sithanen said.
Offshore Pro Group