Mauritius assures India on resolving differences on tax treaty

"If there is room for improvement, we will constantly make room for improvement, of course, in respect and in compliance with the best international practices," Mauritius Foreign Minister Arvin Boolell told reporters here when asked about India's demands for reworking the Double Taxation Avoidance Agreement (DTAA).

During talks with External Affairs Minister S M Krishna today, Boolell also underlined the importance of Mauritius as a springboard for investments by Indian entrepreneurs to Africa.

India-Mauritius tax treaty provides that capital gains arising in India from investments in the country from the island nation can only be taxed in Mauritius.

As Mauritius does not tax capital gains, investments that are routed through the country escape this levy.

A large quantum of foreign investments in India are routed through Mauritius to escape the tax net, which has prompted the government to bring out the General Anti-Avoidance Rules (GAAR) to prevent abuse of the tax treaty.

Boolell said the Joint Working Group set up by the two countries on DTAA would meet from August 22-24 to iron out differences related to tax treaties.

Krishna said India would assist Mauritius in surveillance of its Exclusive Economic Zone and continue joint efforts to fight piracy, which he described as an "expanding menace".

He said India would fast-track the utilisation of the economic package of USD 250 million Line of Credit and USD 20 million grant it had announced in February.

He said the meeting of the Joint Commission on Economic, Scientific, Technical and Cultural Cooperation will be held at an early date in New Delhi.