India is planning amendments to the Double Taxation Avoidance treaty with Mauritius to prevent its misuse for avoiding taxes. “Amendments to the Indo-Mauritius DTAC (Double Taxation Avoidance Convention) to prevent its misuse and enhance exchange of information, including banking information, are being pursued...,” Minister of State for Finance S S Palanimanickam said in a written reply in the Rajya Sabha today.
During the period between 2006-07 and 2008-09, foreign direct investment (FDI) from Mauritius was estimated at Rs 1,24,141 crore, the minister said. FDI from Bermuda, another tax haven, has been to the tune of Rs 1,998 crore. There is, however, no tax treaty between India and Bermuda. The changes in the treaty are being worked upon through a joint working group constituted for this purpose, he added. Many companies route their investments into India through tax havens to avoid paying taxes.
The Organisation for Economic Cooperation and Development (OECD) has said that all countries should permit access to bank information for all tax purposes so that tax authorities could fully discharge their revenue raising responsibilities, the minister said.
To a query if the US was taking initiatives to enact legislation that would prevent American firms from using offshore tax havens and if it would impact investments into India, the minister said: “It is not possible to assess whether European and American initiatives targeting tax havens will have any impact on investments flow to India.”
