Port Louis: Hopeful of reaching an agreement soon on the long-pending revision of tax treaty with India, Mauritius says it has gone 'extra mile' to ensure that the pact does not get misused for illicit activities like money laundering and round-tripping of funds.
Mauritius is willing to take even further steps to resolve any pending issues and reach a "win-win situation" for both the countries, as the treaty has been mutually beneficial in the past three decades, the country's Vice Prime Minister and Minister of Finance and Economic Development Xavier Luc Duval told the agency in an interview.
"I am hopeful. I would hope that we could come to an agreement to ensure certainty and predictability," Duval said in reply to a question on whether he expects to reach an agreement with India on revision of the DTAA (Double Taxation Avoidance Agreement) between the two countries.
"The existing DTAA was signed almost 30 years ago and it has been beneficial to both India and Mauritius and we would like to see this continue given the mutual benefits available from this treaty," he said.
The two countries had signed this DTAA in 1982 when late Indira Gandhi was India's Prime Minister and the treaty was part of various steps initiated by the two countries for strengthening the flow of investments to and from Mauritius.
While the treaty has helped in driving a significant flow of foreign investments coming to India through Mauritius over the years, there have also been concerns in the recent years about a suspected misuse of this pact for round-tripping of funds and laundering of illicit money by Indian entities through this Indian Ocean island nation.
Consequently, India sought to revise the treaty a few years ago, but the matter has been dragging for one or other reason, although a joint working group has been working on revision of the pact for quite some time.
When asked why the revision of the treaty was taking so much time and what are the contentious issues, Duval said: "It will be difficult to comment on specific matters being dealt with in our negotiations. But I understand from the officials engaged in the discussions that there is a greater understanding of the issues on each side and that progress is being made."
"We are hopeful that we can come to an agreement in the near future," he said, while adding that Mauritius in the meantime has introduced a number of measures to address the issues such as round tripping.
"The fact remains that we have gone the extra mile. There are special India conditions in our guidelines for issuance of TRCs (Tax Residency Certificates) which does not allow a company to invest in India if the funds are found to be of Indian origin, TRCs are issued on annual basis.
"To plug any loopholes, we have allowed auditors from India to audit the books of these companies, and there are a number of other similar safeguards," he said.
First Published: Sunday, May 19, 2013, 12:36