Port Louis: Mauritius on Thursday said that a new Tax Information Exchange Agreement (TIEA) with India has been negotiated and is ready to be signed.
The pact would help the two countries exchange information on tax matters of the entities doing business in the two countries, the African island nation's Finance Secretary Ali Mansoor said.
Besides, the two countries are working on a new DTAA (Double Taxation Avoidance Agreement) and progress has been made on various fronts, he said.
According to him, steps required for addressing India's concern over possible money laundering activities through Mauritius is a key element of the ongoing talks.
While Mauritius accounts for almost half of the foreign money coming into India, there have been concerns in recent years that the island nation is being used for money laundering and round tripping of illicit funds.
The concerns have come to fore following names of Mauritius based entities coming to light in some cases of corruption and alleged tax evasion, which were suspected to have been set up by Indian entities to dodge the tax authorities in India.
"A joint working group has been set up for revision of the DTAA and Mauritius has taken a number of steps within and outside the provisions of pact to address India's concerns.
"Indian auditors have been allowed to come and check the books of entities operating from Mauritius. A pact has been signed between market regulators of two countries, Sebi and Financial Services Commission (FSC)" Mansoor said, while listing out the steps.
He also said that Mauritius has agreed to review on a regular basis the Tax Residency Certificates issued by it to the companies investing in India, while the talks are on to make DTAA mutually beneficial for both the countries.
Mansoor was participating in an international taxation conference organised by the International Fiscal Association (IFA).
There have also been talks on Limitation on Benefits clause, which might require Mauritius to collect some amount of tax from entities that fail to meet certain investment commitments in India within a certain period of time.
Mansoor said that tackling the issue of money laundering has become very important for authorities across the world and exchange of information between countries is a key element in addressing these concerns.
"Mauritius is committed to follow all international standards on such information exchange frameworks. Many countries are exploring bilateral exchange of information treaties as well and Mauritius is in talks on many such pacts including on FATCA (Foreign Account Tax Compliance Act) with the US," he said.
First Published: Thursday, May 16, 2013, 14:57