India top-priority funds flow partner, but tax treaties supreme: Mauritius
The island nation off the African continent coast accounts for more than one-third of foreign investments coming through FDI (Foreign Direct Investment) and FII (Foreign Institutional Investments) routes to India.
Many global investors prefer to channelise their Indian investments through Mauritius due to the tax benefits coming out of the DTAA (Double Taxation Avoidance Treaty) between the two countries and favourable regulations in the island nation.
"The foreign investors select Mauritius for routing their Indian investments because of the good relationship between the two countries and India as a top-priority partner in this regard," Mauritius' securities market regulator Financial Services Commission's CEO Clairette Ah-Hen told PTI here.
Ah-Hen was on a visit to India along with the country's financial services industry body Global Finance Mauritius (GFM) CEO Nikhil Treebhoohun and Mauritius' Board of Investment's Assistant Director Harvesh Seegolam.
Mauritius' competitiveness should not be undermined when it comes to renegotiating the treaty with India, they said referring to the new Tax Information Exchange Agreement being worked out between the two countries.
The officials further stressed that the existing DTAA between the two countries was good enough to take care of all the concerns, including those related to round-tripping and money laundering.
Mauritius has also been often accused of being a conduit for black money to and from India. However, Ah-Hen said that Mauritius is "extra careful" when dealing with funds going to and coming from Indian entities, as compared to those of other countries.
"We have high regards for India and given the importance given by Mauritius to it, we are much more serious when funds are going to India... If the funds are going to say China or Africa, we do not have to do that. But, there are special conditions for India and we make sure that these are
fulfilled," she said.
"... There are special conditions, which we have named 'Indian Conditions', for funds found to be linked to entities of Indian origin both in terms of inflows and outflows through Mauritius," the FSC Chief said.
Breach of 'Indian conditions' can lead to revocation of business license to operate out of Mauritius, Ah-Hen said.
Besides, Mauritius is more than eager to share details with India about persons and companies suspected of financial irregularities and complies to all such requests, except those found to be plain 'fishing expeditions' or involving legal implications, she added.
"All request for information sent by India, not only regarding the securities market but also vis-a-vis banks, are replied to, because India gets top priority for Mauritius," the FSC chief said.
If an entity gets licensed as Mauritius-based Global Business Company and later becomes India-related (that is shareholders are of Indian origin or the investments are routed to India), the Indian conditions and the related undertakings get imposed thereafter.
Ah-Hen said the authorities touch base with Indian authorities like RBI, Sebi and others, as the case may be,whenever it comes across any suspicious information.
"If there is a suspicion, we give India more importance than any other country. And investors (global entities routing their investments through Mauritius) know it because it is all written in conditions for their setting base in Mauritius," she added.
GFM chief Nikhil Treebhoohun also dispelled the perception that Mauritius does not respond to the queries made by India with regard to round-tripping and other irregularities and said all such requests are always complied with.
Treebhoohun said that all the information requests made by India have always been replied, except for a few that are either 'fishing expeditions' or those against the rules of the country.
Mauritius' Board of Investment Assistant Director Harvesh Seegolam said that these replies have always been made in a timely manner.
"This is done in very timely manner. We are among the very first country that has welcomed an Indian tax official. We have an official from Indian tax department based in Mauritius," Seegolam said.
Be the first to comment.