Mauritius has rejected India’s allegation that it is not willing to go for a review of the Double Taxation Avoidance Agreement. In an interview to Business Line , Dr Arvin Boolell, Foreign Affairs Minister of Mauritius, invited Indian auditors to Mauritius to audit the companies set up by Indian entities Excerpts.
The Indian Government has alleged that Mauritius is not a ‘willing partner’ when it comes to reviewing the Double Taxation Avoidance Agreement. Your comments.
No. Mauritius has always been a very willing partner. And this treaty doesn’t date back just yesterday. It is a treaty that has been loyal and shown its mettle since three decades. I agree with you there is such a thing as status quo. But if you recall, our Prime Minister came to India on a state visit and spoke to the Indian Prime Minister and if there is ever a perception that more needs to be done, we will do so. So if there’s any loophole that needs to be plugged on round tripping, we will do so.
The discussions have stalled on the capital gains tax issue. Does Mauritius agree to India’s position?
On this specific matter, we favour substance over form. And when it comes to the limitation of benefit, we are going to address it.
The Finance Ministry recently circulated the draft guidelines on GAAR. It implies that once these rules are implemented, FIIs coming from Mauritius might come under GAAR. Are you apprehensive?
No. Let me make it quite clear again that the issue is substance over form and certain limit of benefits. We know who our clients are and ‘Know Your Clients’ norm is of vital importance. When it comes to auditing of accounts, Indian auditors can do it. So if there are any concern that firms are not genuine, the Mauritius authorities are forthcoming to cooperate.
What will be on the agenda of the next round of meeting of the Joint Working Group scheduled for August 22-24, apart from round tripping and tax residency certificates?
I don’t want to highlight the Indian concerns which we are aware of, but since now the guidelines (GAAR) have also been published, there is the reality also of the issues that were initially raised. These issues will be addressed by our officials and technicians. But my interest, and I think the interest of both parties is to actproperly and bring certainty once and for all. Clear the issue and instil the values of certainty.
Mauritius is termed as a tax haven. What do you have to say on this?
Well, this is unfair. Mauritius is a low-tax jurisdiction like many new tax jurisdictions. We have been peer reviewed and we have been assessed by the World Bank and the IMF in the space of Financial Action Task Force responsibility. And we were in full compliance. We are a clean, neat, low-tax jurisdiction.
At the same time, we want to turn the financial service centre into one which will give additional comfort to the Indian operatives. Use Mauritius and invest in Africa. Africa is a continent which is on the move. Mauritius is to India what Jersey is to the UK. We have put in place international arbitration centres. We have signed many investment protection and promotion agreements with African countries and double taxation avoidance agreements, many of which have been ratified. We would encourage Indian companies to set up establishment in Mauritius.
It is often alleged that there are too many ‘post office box’ companies set up by Indian entities in Mauritius. If Indian auditors go there, audit and find some adverse reports, will you take any action?
It goes without saying. Whatever action needs to be taken will be taken. That’s why we’ve invited our Indian friends to come to Mauritius. We will consolidate this sector further.
The term PO box company is not fair. In respect of tax residency certificate, with respect to any company, there are strict conditions which need to be fulfilled. What we want ultimately is to operate in a win-win situation, look at an all-inclusive package which gives satisfaction. And this is the essence of the next meeting of the joint working group.