Mauritius has told India the tax advantage for investors routing money through the island must be maintained.
We wish to reiterate that Mauritius is committed and willing to collaborate fully to address the concern of the Indian side on the DTAA while ensuring that the treaty remains commercially viable, the finance and economic development ministry of the nation has said in a release.
The release comes just days after the India softened its stance on the tax treatment for foreign investors who come through the island.
While the Finance Bill had said residents from the island in whose name investments are made will have to show additional proof that they are indeed the actual investors,the Indian finance ministry issued a clarification that this will not be needed. The Mauritius statement comes ahead of the meeting of the joint working group of the tax officials of the two nations in the last week of March. The statement makes it clear the country will not accept any changes in the tax residency certificate it issues to investors investing in the Indian stock markets.
More than 40 per cent of the portfolio investment into India comes through the Mauritius route. Under the double taxation avoidance agreement (DTAA) between the two nations,foreign investors using the island route get an exemption from the 15 per cent short term capital gains tax on listed securities.
The statement says that the Budget announcement created much confusion among investors in India and internationally,including those using Mauritius to do business with India.