Open AccessRound Tripping and Treaty Shopping: Controversies in Bilateral Agreements & Remedies Forward - The Double Taxation Avoidance Agreement (DTAA) between Mauritius and India and the Dilemma Forward
Author(s) -
Rajendra Parsad Gunputh,
Anupam Jha,
Sameerchand Pudaruth
Publication year - 2017
Publication title -
kathmandu school of law review
Language(s) - English
Resource type - Journals
eISSN - 2773-8159
pISSN - 2091-2110
DOI - 10.46985/jms.v5i2.985
Subject(s) - treaty , negotiation , international trade , double taxation , international economics , government (linguistics) , tax treaty , business , economics , tax avoidance , law , political science , finance , linguistics , philosophy
In a contextualized approach, the authors have revisited the DTAA 1 between Mauritius and India to reflect to what extent RoundTripping and Treaty Shopping have an impact in the bilateral agreement between India and Mauritius. The DTAA between India and Mauritius2was signed in August 1982, and the spirit of the bilateral agreement and the negotiations, which were carried out afterwards successively, were to provide exemptions from shareholders as who have already been taxed in Mauritius should not be taxed further. However, exemptions from capital gains tax in Mauritius would also mean that tax evasion soon becomes the center of recent negotiations between the two countries with serious concerns over tax abuses, round tripping and treaty shopping. Nevertheless, although Mauritius is considered a tax haven, there are still very strong ties betweenthe two countries both historically and financially with mutual economic and financial support in a win-win situation. Indeed, Mauritius contributes to nearly 34% of total Foreign Direct Investment (FDI) flow into India becoming one of the largest contributors of FDI into India, competing directly with other countries like Singapore. However, it was felt by the Indian Government that there are strong abuses against tax evasion in Mauritius in addition to black money and money-laundering, and consequently India had to tread in deep waters to amend its DTAA to prevent round tripping and consequently treaty shopping.