PORT LOUIS, Mar 12: India and Mauritius will work together to avoid the “abuse” of double taxation avoidance convention, Prime Minister Narendra Modi declared today, as the two countries agreed to push negotiations for a long pending revision of the treaty.
He also assured Mauritius that India will do nothing to harm the vibrant financial sector of “one of our closest strategic partners”.
“We will work together for our shared objective to avoid the abuse of our double taxation avoidance convention,” Modi, who is on a two-day visit, said while addressing the National Assembly of the Indian Ocean island nation.
Often corporates have been accused of laundering money through the “Mauritius route” for channelling FDI in India and the two governments have been in negotiations to curb this practice.
Negotiations to amend the bilateral tax treaty have been hanging fire for a long time amid India’s apprehensions that it is being misused to route black money and evade taxes.
Prime Minister Modi and his host Sir Anerood Jugnauth agreed to push forward their negotiations for a long pending revision of Double Taxation Avoidance Treaty (DTAT) during their talks here last night.
“Yesterday, I told Prime Minister Jugnauth that we understand the importance of the offshore banking sector for your economy. We are conscious of its dependence on India,” he told lawmakers.
“We will do nothing to harm this vibrant sector of one of our closest strategic partners,” he assured the lawmakers in his address today.
Jugnauth yesterday said that he had raised with Modi issues related to the Mauritius-India Double Taxation Avoidance Agreement (DTAA).
“We appreciate that already India postponed the consideration of the GAAR until 2017. However, we have stressed on the initiatives taken by Mauritius to build substance within our offshore jurisdiction. I have requested PM Modi to give his full support on the DTAA as it is of prime importance for our global business sector,” he said.
Modi in his response said the two sides agreed to continue negotiations for a revised treaty based on shared objectives to prevent the “abuse” of the convention.
“It has been a great privilege to be a development partner for Mauritius. We will always be ready to do more, in accordance with your wishes,” Modi told lawmakers.
He recalled India’s decision to provide Mauritius a new Line of Credit of USD 500 million for the development of civilian projects in the country.
Modi also offered to establish a second cyber city in Mauritius after India helped the island set up the first one a decade ago. He lauded the e-health project in Mauritius, saying India would be happy to support its development.
“We are honoured to be Mauritius’s partner for meeting its petroleum requirements. We are embarking on a new project to build the petroleum storage facility here. This will further strengthen the position of Mauritius as a regional economic hub,” the Prime Minister said.
He said the two sides can share their understanding on marine ecology and explore new opportunities. “We can improve our ability to pursue more sustainable practices,” he said.
Modi praised Mauritius as a leading international voice on climate change and said, “our partnership must also cover the challenge of climate change”.
“We look forward to working with you for a more resolute global action against climate change,” he told the lawmakers. “We can pursue our dreams of a sustainable and prosperous future if we are confident about peace, security and stability in our world.”
Modi said India seeks a “comprehensive partnership of closer security, economic, cultural, scientific and people-to-people ties in our region”.
“That is why we are grateful that Mauritius hosts the Indian Ocean Rim Association. Your leadership will remain important to realise our vision,” the Prime Minister said.
Modi also thanked Mauritius for its support for UN Resolution declaring June 21 as the International Day of Yoga.
He hailed Mauritius National Day which honours Mahatma Gandhi, saying “it forms a deep bond of emotion between our two countries”.
Describing Mauritius as a bridge to Africa, Modi said “democratic changes make no difference to the strength of our relationship.” (PTI)
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