New Delhi: Mauritius will start automatic exchange of tax information with other nations only from September 2018, as it has postponed by a year implementation of global common reporting standard on tax matters.
The delay could impact Indian authorities' efforts to gather more tax-related information from Mauritius, which is allegedly being used by some entities to route illegal funds into India.
Once the standard is in force, there would be stringent measures to curb illicit fund flows, including the requirement to carry out due diligence procedures to record tax residence of clients opening new accounts.
Joining global efforts to curb flow of black money and tax avoidance activities, Mauritius, back in 2014, agreed to bring into force the common reporting standard for automatic exchange of tax information with other countries.
Initially, Mauritius was to implement the standard from January 1, 2016.
"The first exchange of information under CRS (Common Reporting Standard) will take place as from September 2018.
The requirement to apply due diligence procedures to record tax residence of clients opening new accounts, takes effect as from January 1, 2017," Mauritius Revenue Authority has said.
In a recent communique to stakeholders, the authority also said that in due course, a technical committee would be convened to discuss and finalise the guidance notes for the implementation of CRS.
Queries sent to Mauritius Ministry of Finance and Economic Development on the issue remained unanswered.
The standard have been prepared by Paris-based think tank OECD (Organisation for Economic Cooperation and Development) after extensive consultations.
Meanwhile, the proposed amendments in the Indo-Mauritius tax treaty have been hanging fire for many years amid India's concerns over the island nation being allegedly used to route illicit funds into the country.
India has concerns that Mauritius, which is one of the top sources of FDI into the country, is being used for round-tripping of funds. Round-tripping is usually referred to routing of domestic investments through Mauritius to take advantage of the tax treaty between the two countries.
A significant number of global firms, including those from the US and Europe, have traditionally been using the island nation to route their investments in India to benefit from an Indo-Mauritius DTAA (Double Taxation Avoidance Agreement) in force since 1983.