The Mauritius route is a channel used by foreign investors to invest in India. Mauritius is the main provider of foreign direct investment (FDI) to India and also the preferred jurisdiction for Indian outward investments into Africa. In fact 39.6% of FDI to India came from Mauritius between 2001 and 2011.
Contents
Business Organisations of Mauritius investing in India
Nine of the 10 largest foreign business organizations or companies investing in India(from April 2000- January 2011) are based in Mauritius . List of the ten largest foreign companies investing in India(from April 2000- January 2011) are as follows --
- TMI Mauritius Ltd. -> Rs 7294 crore/$1600 million
- Cairn UK Holding -> Rs6663 crores/$1492 million
- Oracle Global (Mauritius) Ltd. -> Rs 4805 crore/$1083 million
- Mauritius Debt Management Ltd.-> Rs 3800 crore/$956 million
- Vodafone Mauritius Ltd. – Rs 3268 crore/$801 million
- Etisalat Mauritius Ltd. – Rs 3228 crore
- CMP Asia Ltd. – Rs 2638.25 crore/$653.74 million
- Oracle Global Mauritius Ltd. – Rs 2578.88 crore / $563.94 million
- Merrill Lynch(Mauritius) Ltd. – Rs 2230.02 crore / $483.55 million
- Name of the company not given (but the Indian company which got the FDI is Dhabol Power company Ltd.)
Financial Services sector
Since the inception of its Financial Services sector, Mauritius has taken all appropriate steps to safeguard the credibility of its jurisdiction. Mauritius has a stringent legal and regulatory framework recognized by the International Monetary Fund, Financial Stability Board and the Organisation for Economic Co-operation and Development (OECD) to combat money laundering. Furthermore, Mauritius appears on the OECD White List of Jurisdictions that have substantially implemented the internationally agreed tax standards. Recent peer review of Mauritius by the OECD Global Forum, further upholds that Mauritius has all the essential elements in place for an effective exchange of accounting, banking, and ownership/identity information with other countries. Mauritius is also compliant with norms prescribed by International Organization of Securities Commissions, Iowa Interstate Railroad, Financial Action Task Force on Money Laundering and the Basel Committee and has enacted necessary legislation. In this regard, the Mutual Assistance in Criminal and Related Matters Act and the Financial Intelligence and Anti-Money Laundering Act 2002 which provides a framework for exchange of information on money laundering with members of international financial intelligence groups are cases in point. The Asset Recovery Act was promulgated to enlarges the scope for freezing ill-gotten assets.
Double Taxation Avoidance Agreement (DTAA)
India has comprehensive Double Taxation Avoidance Agreement (DTAA) with 88 countries. This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country. Under the Income Tax Act 1961 of India, there are two provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from double taxation. Section 90 is for taxpayers who have paid the tax to a country with which India has signed DTAA, while Section 91 provides relief to tax payers who have paid tax to a country with which India has not signed a DTAA. Thus, India gives relief to both kind of taxpayers.
According to the tax treaty between India and Mauritius, capital gains can only be taxed in Mauritius, the same treaty exist with 16 other countries. Thanks to its low 3% capital gains tax, quality regulatory framework, professional labor, geographical proximity, cultural affinities, and historical ties with India, Mauritius is the most attractive conduit for investments into India.
The DTAC has helped Mauritius in developing its financial services industry while India has benefitted through FDI and job creation.
Suspicion
According to various Indian press, the DTAA are being misused by investors to avoid paying taxes by routing investments through various countries which has tax treaty with India, in particular Mauritius and Singapore, which account for 48% of FDI inflow to India.
Fake News
On 6 July 2012, The Times of India (TOI) published an article Mauritius offers India 2 islands in effort to preserve tax treaty. According to this newspaper, the Minister of Foreign Affairs of Mauritius Arvin Boolell, who was on an official visit to India during this period, stated that Mauritius will cede its Outer islands, that is the Agalega Islands to the Government of India in exchange for the maintenance of the non-double taxation between India and Mauritius.
The Minister of Foreign Affairs of Mauritius later denied the claims of handing over the Agalega Islands to India. The Minister also denied that he had named the Agalega Islands in his conversation with the journalist of Times of India. He points out that the Times of India has "a hidden agenda", he says, it is not the first time that Times of India has done this and claims that he talked to the reporter who wrote the article and that he has "apologized", following the publication of this article. The Prime Minister of Mauritius, Navinchandra Ramgoolam also refuted the claim of TOI. He accused the Indian journalist of TOI of reporting falsehoods about the supposed negotiations between India and Mauritius on the management of Agalega.
The High Commission of Mauritius in India, also issued a statement, explained that"this information is erroneous, false and malicious...Never was the issue of Agalega raised either on a stand-alone basis or as part of the double-tax avoidance agreement between India and Mauritius". He explained that the Mauritian Minister of Foreign Affairs has granted several interviews to the Indian press and he did, at no time discussed the issue of Agalega.
The Times of India published another article on 6 July 2012 with title Minister clarifies Mauritius island offer and mention that it had knowledge about an earlier proposal about the Agalega Islands and had therefore, put a question on the two islands to which the minister had responded. However it did not mention that the offer of Agalega Islands was denied by the Government of Mauritius. Mauritius and India signed an agreement to upgrade to Agalega islands. According to "India's Ocean: The Story of India's Bid for Regional Leadership". ISBN 1317806999. any use of North Agalega is likely to occur gradually.