Mauritius tax treaty amended to curb misuse
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓India and Mauritius signed a new protocol in 2024 to amend their tax treaty.
- ✓It introduces a principal purpose test to stop tax evasion.
- ✓Riaz Thingna said, "The revised treaty expressly clarifies that its objective is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion."
Story at a Glance
- Category
- BUSINESS
- Reported By
- Financial Express
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
Under the PPT, tax authorities can deny treaty benefits to a Mauritius-based investor in cases where obtaining the benefits was one of the primary purposes of an arrangement or transaction.
The ministry has also amended the preamble and the entitlement to benefits provision of the India-Mauritius DTAA.
"The revised treaty expressly clarifies that its objective is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance," said Riaz Thingna, Partner-Tax, Grant Thornton Bharat.
The amended treaty would empower tax authorities to deny treaty benefits - like lower tax rates on capital gains, dividend income or exemptions - unless the relevant Mauritius entity has genuine commercial reasons to exist. The change will have implications for foeign portfolio investors, private equity funds, venture capital funds, etc., with a nominal presence in the island country, which offers a benign tax regime.
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