We will never allow crooks to do business here: Mauritius

Warning tax ‘crooks’ of stern action if they try to operate from its soil, Mauritius has promised full support to India in bringing to book any entity trying to indulge in money laundering or round tripping through this island nation.

Terming the perception of Mauritius being used by Indian entities for money laundering and other tax evasion activities as based on “misconception and misinformation”, the country’s Vice Prime Minister Xavier Luc Duval also said that some people might be using the island nation as a ‘political football’ to meet their own goals.

“You can rest assured, we will never allow crooks to do business in this country, and if they try, they will face the toughest punishment,” said Duval, who is also the Finance and Economic Development Minister.

“We always aim for quality (in whatever we do). Our island’s reputation is very important to our citizens. Our country is known and respected worldwide as a jurisdiction of the highest quality and integrity,” he said.

The Minister said Mauritius has taken numerous steps over the years to ensure compliance with global norms and standards in the financial services business and it has always been a collaborative and transparent jurisdiction.

“Mauritius has always been committed to fully collaborate with other Governments, authorities to ensure effective and timely exchange of information. Obviously, at the beginning we were on a learning curve, but since then we have gained huge experience,” he said.

Mauritius used by tax evaders

Mauritius accounts for a major chunk of foreign investments coming into India, as many investors from the US, Europe and other places tend to route their capital flows into India through this Indian Ocean country to benefit from a favourable tax treaty and the ease of doing business here.

However, concerns have been raised in recent years that Mauritius is also being used by the tax evaders to launder their illicit funds to and from India.

There have also been allegations that Mauritius is home to a large number of shell companies that have been set up here to benefit from the favourable taxation regime and treaties and they do not have any substantial business in the country.

“Obviously as we progress as a jurisdiction, we are continually enlarging the type of services offered and the number of service providers that are here.

“We are introducing in our legislation enhanced commercial substance requirements for the global business companies operating from Mauritius,” he added.

Duval said that Mauritius’ greatest asset has been its human resources and it was because of this asset that the country has reached a higher middle income status, despite having very little by way of natural resources.

“So, it has been very disappointing to see some unfortunate reports attacking our reputation in India. Our country has very strong friendship with India. I believe this (the allegations) is based on misconception and misinformation, with some people using Mauritius as a political football,” he said.

While the Minister did not specify further on how Mauritius was being victimised, there have been talks that India-focused investors might shift to other jurisdictions like Singapore in the wake of concerns like round tripping raised about this African country, which has a significant chunk of Indian origin people as its citizens.

Mauritius-India cooperation

Warning of strict action against any illicit business from the country, Duval said, ” Our laws are very stringent including our anti-money laundering legislation. This clearly shows our proactiveness to prevent any kind of illicit transactions from being structured in the country.

“Furthermore Mauritius has always been collaborative and cooperative. We have an excellent track record of cooperation with governments worldwide to prevent and identify any illicit activity.

“We regularly share information with the Indian authorities and some of the scams that have been uncovered in India have been as a result of information collected in Mauritius,” he said.

Asked about the information sought by India on cases concerning the 2G scam and chopper deal, among others, Duval said, “We have been glad to collaborate and have given all information available here. In fact we exchange information and we don’t look for excuses.

“We fully support India in its legitimate efforts to fight Money Laundering and round tripping,” he said.

In reply to a question on what Mauritius’ reply is when the queries appear to it as vague and like ‘fishing expeditions’, Duval said, “I can tell you that if it is legally possible to provide the information, we do it. I believe all requests for information that are legally in order have been answered and none are outstanding.”

“The message that I want to give to any person thinking to engage in anything illegal in or from Mauritius is that they would be very ill advised to do so,” he added.

On the pending tax treaties with India, Duval said that both sides have agreed on a new Tax Information Exchange Agreement (TIEA) and it is now waiting to be signed.

On the Double Taxation Avoidance Agreement (DTAA), he said the treaty has been mutually beneficial for the two countries for the past three decades and is hopeful that an agreement would be reached soon on a revised DTAA and would address all the concerns India might have.