Mauritius has promised full cooperation with India to address outstanding issues relating to their bilateral tax treaty, days after Prime Minister Narendra Modi's visit to the island nation.
The much-talked about changes in India-Mauritius Double Taxation Avoidance Agreement (DTAA) have been hanging fire for a long time, despite several rounds of official level talks between the two sides.
Apprehensions persist that Mauritius is being used for round-tripping of funds into India even though the island nation has always maintained that there have been no concrete evidence of any such misuse. Mauritius has been one of the largest sources for foreign direct investment in India and inflows touched USD 7.66 billion in the April 2014-January 2015 period.
Reflecting the importance that Mauritius attaches to India, the reference about the bilateral tax agreement was made by its Finance Minister Seetanah Lutchmeenaraidoo in his Budget speech yesterday.
"The clear statement made by Prime Minister Modi during his last visit in Mauritius has reassured all stakeholders in the global business sector that India will do nothing to harm this sector," Lutchmeenaraidoo, who is also the Economic Development Minister, said.
"We will cooperate fully with Indian authorities to bring to a fruitful conclusion our discussions on outstanding issues relating to the Double Taxation Avoidance Agreement (DTAA)," he said while presenting the Budget for 2015-16.
Regarding Agalega island, the Finance Minister said that with the assistance of Indian government "Rs 750 million will be invested in the construction of a new airstrip and new jetty facilities".
During his visit, earlier this month, Modi and his Mauritian counterpart Anerood Jugnauth discussed the issues related to the tax treaty.
"We appreciate that already India postponed the consideration of the GAAR until 2017. However, we have stressed on the initiatives taken by Mauritius to build substance within our offshore jurisdiction.
"I have requested PM Modi to give his full support on the DTAA as it is of prime importance for our global business sector," Jugnauth had said during a joint press conference with Modi in Mauritisus on March 11.
In his response, Modi had said the two sides agreed to continue negotiations on the revised treaty based on shared objectives to prevent the "abuse" of the convention.
He had also assured Mauritius that India would do nothing to harm its interests.
"I also conveyed our deep appreciation for the support and cooperation offered by Mauritius on information exchange on taxation," Modi had said.
In the Budget speech, there was also a reference to India's proposed assistance to develop the Agalega island.
"Regarding Agalega, with the assistance of the Indian Government, Rs 750 million will be invested in the construction of a new airstrip and new jetty facilities," Lutchmeenaraidoo said.
An MoU (Memorandum of Understanding) for the improvement in sea and air transportation facilities at Agalega island was signed between India and Mauritius during Modi's visit.
The visit also saw India offering $500 million concessional line of credit to Mauritius for key infrastructure projects and both sides also inked five agreements, including one on developing ocean economy.
"I was pleased to offer a concessional line of credit of $500 million for civil infrastructure projects for Mauritius. We intend to quickly build the petroleum storage and bunkering facility in Mauritius," Modi had said at the signing of the pacts.
Among the five pacts between the two sides, one MoU is in the field of 'Ocean Economy' aimed at providing which will provide an extensive framework for cooperation, a novel and critical area of sustainable development in the Indian Ocean Region.
