REJOINDER: “India and the renegotiation of its double taxation avoidance agreement with Mauritius: an update”

 

This rejoinder is in response to an article entitled “India and the renegotiation of its double taxation avoidance agreement with Mauritius: an update,” written by Naomi Fowler, and published on the website of the Tax Justice Network on 4 April 2019, which the Economic Development Board of Mauritius (EDB) deems inaccurate.

 

Firstly, the substantive part of the article conflates the use of Double Taxation Avoidance Agreements (DTAAs) with tax evasion or tax abuse.

This is a very skewed view.

The signing of DTAAs forms an integral part of any government’s action in implementing the most enabling framework supportive for foreign direct investment (FDI). FDI is one of the most stable forms of foreign capital, without risks linked to national debt. And a DTAA removes the risk of double taxation which can occur when investors engage in cross-border investments. A DTAA also lays down the taxing rights of the two countries.

The model DTAA of Mauritius is based on the OECD model, developed after years of bestpractices.

Secondly, the author of the article wrongly refers to the Judgement of the Kenyan High Court regarding the Mauritius-Kenya DTAA.

In fact, the grounds for this Judgement only relates to a procedural element in the ratification process of the Kenya-Mauritius DTAA.

The Kenya High Court found that the Petitioner in the case, the Tax Justice Network, had failed to adduce any evidence on their claim of “tax dodging” and other purported economic loss. The Court also made no criticism of the DTAA itself.

Thirdly, the article discredits the role of Mauritius in driving quality investments in India.

It is noteworthy that over the years, investments through Mauritius into India have gone in productive and sustainable sectors, including healthcare, housing, infrastructure, telecommunications, and education, amongst others.

At the same time, Indian companies have also availed of the provisions of the DTAA to invest in Mauritius, and through Mauritius into other emerging markets.

Mauritius is also a privileged trade partner of India; for instance, the total imports from India to Mauritius amounts to nearly MUR 30 billion, while exports from Mauritius to India is around MUR 512 million.

Fourthly, the article does not make mention of the adherence of Mauritius to international best-practices.

Mauritius is compliant with all OECD norms, including the Global Forum on Transparency and Exchange of Information for Tax Purposes, the Base Erosion and Profit Shifting project, and the Common Reporting Standard. Mauritius is also not on the backlist of the European Union.

And companies operating in Mauritius are subject to stringent substance requirements, including minimum of number of resident directors, full time employees, expenditure, and principal bank accounts, amongst other, in Mauritius.

Mauritius is committed to fully collaborate with international norm-setting organisations at all levels.

 

Source: EDB Mauritius