Strong measures in place to check round tripping: Mauritius

Emphasising that India-focussed overseas funds are subjected to stringent checks in Mauritius, financial services regulator here said it has stepped up enforcement of norms to prevent any round tripping of funds through the island nation.
There are provisions to cancel the licence of entities if they are found to be indulging in round-tripping or money laundering activities, Mauritian Financial Services Commission (FSC) CEO Clairette Ah-Hen said.
"We have stepped up in terms of our enforcement. We look at who the people are behind (the investments into India)...," she told PTI in an interview here.
India and Mauritius are discussing changes to their bilateral taxation treaty to address concerns of the Indian side and the next meeting of a Joint Working Group (JWG) in this regard is expected to be held later this month or early in October.

Mauritius says it has put in place various conditions for issuance of Tax Residency Certificates (TRCs) -- which allow entities to take tax benefits under the Indo-Mauritius Double Taxation Avoidance Agreement (DTAA).
One of the conditions is that if any such entity is found to be involved in round tripping activities, their licenses would get cancelled, said Ah-Hen, who is a member of the JWG.

"... If you (an entity) are going against the policy (of not doing round tripping), we are going to take your license off. This is the pre-condition we have put and anyone who is going to invest in India would know, this is the Indian condition we have agreed to," she noted.

Ah-Hen asserted that this condition has helped in preventing the abuse of the Indo-Mauritius tax treaty.
FSC is the integrated regulator for all financial services businesses in Mauritius, except banking, and also regulates the global business sector that allows foreign entities to set up shop in the country for onward investments into India and other countries.
Mauritius Bankers Association (MBA) Chief Executive Aisha C Timol also said that the country has a clear and transparent process in terms of issuing TRCs and India has been assured that the tax treaty is not being abused.
"We think, we have given all the assurances to the Indian authorities that the treaty is not being abused and that whoever routes investment through Mauritius into India is available on a very transparent basis to the Indian authorities in terms of exchange of information.

"It (investment) has to be done through a Tax Residency Certificate that is issued by our tax authorities. The process is clear and transparent," Timol said.