India and Mauritius have completed a further round of negotiations towards a new Double Tax Agreement (DTA), in order to replace the existing one signed back in 1983.
It is anticipated that exchange of information and administrative assistance clauses should be part of the new DTA. The parties are said to have agreed on tighter and clarified requirements on the commercial substance of Mauritius-based entities entitled to treaty benefits.
India is also pushing for the introduction of a limitation of benefits clause, but this remains to be negotiated. However, Mauritius has made it clear that it is not renouncing the existing exemption from source taxation on capital gains, although it is open to a constructive dialogue to combat abusive treaty shopping and respond to India's concerns in this respect.
Mauritius has benefitted considerably from the DTAs it has signed with India and African countries, but India has become increasingly anxious to reduce the offshore tax avoidance opportunities its treaty offers for companies investing through Mauritius.
It is anticipated that exchange of information and administrative assistance clauses should be part of the new DTA. The parties are said to have agreed on tighter and clarified requirements on the commercial substance of Mauritius-based entities entitled to treaty benefits.
India is also pushing for the introduction of a limitation of benefits clause, but this remains to be negotiated. However, Mauritius has made it clear that it is not renouncing the existing exemption from source taxation on capital gains, although it is open to a constructive dialogue to combat abusive treaty shopping and respond to India's concerns in this respect.
Mauritius has benefitted considerably from the DTAs it has signed with India and African countries, but India has become increasingly anxious to reduce the offshore tax avoidance opportunities its treaty offers for companies investing through Mauritius.
