Seeking to dispel concerns about Mauritius being used for round-tripping of Indian money, the island nation’s financial sector watchdog has sought a quick resolution of tax related issues between the two countries.
Indian-origin Rajeshsharma Ramloll, who took charge as Chairperson of Financial Services Commission (FSC) last month, said that a quick resolution of issues related to Indo- Mauritius tax treaty would not only benefit the two nations but also boost investor confidence and ensure certainty.Amid apprehensions in India that Mauritius is being used for money laundering activities, proposed revisions to the bilateral tax treaty has been hanging fire for a long time.
“The issues relating to the Indo-Mauritius tax treaty need to be resolved quickly. A quick resolution will not only benefit both countries, but also ensure the certainty, clarity and predictability and boost investor confidence... That are much required for both countries,” Ramloll told the news agency.
Stressing that Mauritius has taken many steps to address India’s concerns, Ramloll said the island nation is an economical as well as an efficient route for making investments into India.He said that Mauritius provides stability, predictability and security for investors besides value added services.
“For this reason, I believe that companies using Mauritius to invest in India do not do so only because of the DTAC (Double Taxation Avoidance Convention) but because Mauritius is a respectable and competitive International Financial Centre providing total packaged financial services,” Ramloll said.
Set up in 2001, FSC is the integrated regulator for all non-banking financial services and global business sectors in Mauritius, which has been a major route for foreign investments coming into India.
Foreign Direct Investment (FDI) equity inflows from Mauritius to India touched USD 78.525 billion during April 2000-March 2014 period.Besides DTAC, both nations have Bilateral Investment Promotion and Protection Agreement. India has been the largest exporter of goods and services to Mauritius since 2007.
Elaborating on measures in place to address the concerns, he said that more stringent licensing conditions have been put in place to ensure that Indian sourced funds are not re- invested in India through Mauritius to prevent round tripping.For better exchange of information between the two nations, an Indian Revenue Department officer has been posted at the High Commission in Port louis, he added.
During his visit here in May, Indian-origin Prime Minister Navin Ramgoolam had said the island nation has decided to provide automatic exchange of tax related information with India. Ramloll said that fresh steps have been taken to ensurethat there is substance in activities carried out by global business companies in Mauritius.
“This enhanced substance requirement is about demonstrating that companies set up in Mauritius are genuine and not mere fly by night companies so to speak and that Mauritius has more to offer than just tax benefit,” he noted.Ramloll, a barrister, took over as FSC chairperson on June 1. Earlier in May, he was appointed a member of FSC board. He holds a specialist llM in taxation from the University of london and a member of the International Fiscal Association (IFA), among others.
“Mauritius and India have close historical, cultural and economic links... Both countries have established valued and trusted partnerships and signed a number of agreements to enable and consolidate cooperation in many sectors,” he noted.Talking in general, Ramloll said that regulators need to adapt the rules in response to changing conditions in the global market place to prevent new products from escaping the proper regulatory scrutiny.
“We firmly believe that better financial regulations remain a pivotal aspect of making the financial services sector safer, robust and stable. “The FSC, has over the years, sought to adapt its regulatory process to ensure consistency with international norms and standards, to promote financial stability,” he said.