Chennai: Economic Development Board of Mauritius has maintained that the Double Taxation Avoidance Agreement, which was amended by India and is coming fully into effect from April 1, is based on OECD model.
India had amended DTAA with Mauritius and Singapore in 2016 levying capital gains tax on investments routed through these countries. The taxes on capital gains were applicable to investments made from April 1, 2017 at 50 per cent of the domestic rate until March 31, 2019 and at the full rate from April 1, 2019.
Rejecting the argument that the use of DTAAs leads to tax evasion or tax abuse, EDB said that the signing of the agreement 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 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.
