Kathmandu School of Law Review

P-ISSN : 2091-2110, E-ISSN : 2773-8159, DOI : 10.46985, Publisher : Kathmandu School of Law, Nepal
Annual flagship journal of Kathmandu School of Law, Nepal

Volume 5, Issue 2, November 2017
Articles

Round Tripping and Treaty Shopping: Controversies in Bilateral Agreements & Remedies Forward - The Double Taxation Avoidance Agreement (DTAA) between Mauritius and India and the Dilemma Forward

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  • Rajendra Parsad Gunputh
    ,
  • Anupam Jha
    ,
  • Sameerchand Pudaruth
Rajendra Parsad Gunputh
University of Mauritius
Bio
Anupam Jha
Law at Universityof Delhi
Bio
Sameerchand Pudaruth
University of Mauritius
Bio

Published 2017-11-30

How to Cite

Gunputh, R. P., Jha, A., & Pudaruth, S. (2017). Round Tripping and Treaty Shopping: Controversies in Bilateral Agreements & Remedies Forward - The Double Taxation Avoidance Agreement (DTAA) between Mauritius and India and the Dilemma Forward. Kathmandu School of Law Review, 5(2), 29–41. Retrieved from https://kslreview.org/index.php/kslr/article/view/985

Abstract

In a contextualized approach, the authors have revisited the DTAA 1 between Mauritius and India to reflect to what extent RoundTripping and Treaty Shopping have an impact in the bilateral agreement between India and Mauritius. The DTAA between India and Mauritius2was signed in August 1982, and the spirit of the bilateral agreement and the negotiations, which were carried out afterwards successively, were to provide exemptions from shareholders as who have already been taxed in Mauritius should not be taxed further. However, exemptions from capital gains tax in Mauritius would also mean that tax evasion soon becomes the center of recent negotiations between the two countries with serious concerns over tax abuses, round tripping and treaty shopping. Nevertheless, although Mauritius is considered a tax haven, there are still very strong ties betweenthe two countries both historically and financially with mutual economic and financial support in a win-win situation. Indeed, Mauritius contributes to nearly 34% of total Foreign Direct Investment (FDI) flow into India becoming one of the largest contributors of FDI into India, competing directly with other countries like Singapore. However, it was felt by the Indian Government that there are strong abuses against tax evasion in Mauritius in addition to black money and money-laundering, and consequently India had to tread in deep waters to amend its DTAA to prevent round tripping and consequently treaty shopping.

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References

  1. The Double Taxation Avoidance Agreement between Mauritius and foreign countries especially India in a network of 33 tax treaties where neither capital gains nor withholding taxes are levied and the Integrated Resort Scheme projects-infra just to name a few are also very promising.
  2. Actually, Mauritius ranks 32nd among 175 countries and second in Africa, after South Africa, and ease for doing business (World Bank’s “007 Doing Business Survey, 2007) after various economic reforms, business facilitation, investment opportunities and incentives.
  3. Foreign Direct Investment is the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other longterm capital, and short-term capital as shown in the balance of payments. This series shows net outflows of investment from the reporting economy to the rest of the world and is divided by GDP available at www.indexmundi.com/facts/mauritius/foreign-directaccessed on 24 January 2017.
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