India plans review of tax treaty with Mauritius

May 04, 2012 |

Reuters

New Delhi

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India is considering a review of the Double Taxation Avoidance Treaty with Mauritius to raise revenues, Minister of State for Finance S.S. Palanimanickam told lawmakers on Friday.

Indian officials have said the country was losing more than $600 million every year in revenue because of the tax treaty, besides incurring the risk of militant groups using it to route money into India.

The government has been under pressure from opposition parties to renegotiate the treaty, as Indian investors ship their money to Mauritius and then funnel it back untaxed.

Palanimanickam said even after holding seven rounds of bilateral talks, the government feels an unwillingness on the part of Mauritius to address the tax evasion issue.

The minister said 39.5 percent of the total foreign direct investment flows into the country between April 2000 and February 2012 have been channeled through Mauritius.

However, no fresh dates have been finalised for the next round of talks on the issue, he said.

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