India and Mauritius have reached consensus on the conclusion of a tax treaty, the Mauritian government announced July 1.
Agreement was reached yesterday following discussions held by a joint working group of Indian and Mauritian officials, the government said.
The Mauritius government said that revision of the 1983 double tax treaty is needed to clear up uncertainties arising from India’s introduction of tax measures in its 2012 budget, particularly general anti-abuse rules (GAAR).
Set to come fully into force April 1, 2017, the GAAR gives Indian tax authorities ability to scrutinize deals that are structured to evade tax, overriding any tax treaty benefit.
“There was apprehension that the GAAR provisions and the treaty overriding provision would impact majorly on taxpayers outside India,” the government said.
In a statement, Mauritius Minister of Finance and Economic Development Vishnu Lutchmeenaraidoo expressed his gratitude to Indian Prime Minister Narendra Modi for committing to ensure that India will not cause any prejudice to Mauritian interests in the treaty negotiations.
India has been trying to amend its double tax treaty with Mauritius for many years, believing it is being used to evade taxes through round-tripping of funds.
The agreement follows Mauritius’s signing on June 23 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which is designed combat offshore tax evasion through international cooperation.
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