India, Mauritius will work to avoid tax treaty abuse: Modi

Posted on 12th Mar 2015 by mohit kumar

Port Louis, March 12 (IANS) Prime Minister Narendra Modi on Thursday assured that India would work with Mauritius to avoid the "abuse" of the double taxation avoidance agreement and added that the destinies of both nations are "linked by the currents of the Indian Ocean".

Addressing the National Parliament of Mauritius, Modi said that he had told Prime Minister Anerood Jugnauth that India understands the importance of offshore banking sector for the Mauritian economy.

"We are conscious of its dependence on India. We will work together for our shared objective to avoid the abuse of our double taxation avoidance convention. I thank you for your support," he said.

"But, I also assure you that we will do nothing to harm this vibrant sector of one of our closest strategic partners," Modi said to the applause of the members.

Negotiations to amend the Indo-Mauritius tax treaty have been hanging for a long time amid India's apprehensions that it is being misused to route unaccounted money and evade taxes.

Round-tripping is usually referred to routing of domestic investments through Mauritius to take advantage of the Double Taxation Avoidance Agreement (DTAA) between the two countries. Mauritius is one of the top sources of foreign direct investments (FDI) into India.

Both sides have been discussing the treaty revision for quite some time. Mauritius has always maintained that there has been no concrete evidence of any such misuse and that it has strict checks and balances in place. Uncertainties over the tax treaty have adversely affected investment flows between the two nations.

Modi also said India and Mauritius are partners in economic progress. "We shoulder our shared responsibility to advance security in the Indian Ocean... I see Mauritius as a leader in the Indian Ocean Community and as a bridge to Africa," said Modi.

He is the fifth Indian prime minister to address the Mauritian National Assembly but the first to address the National Assembly on the day of its National Day, which coincides with the day Mahatma Gandhi began his Dandi March in 1930.

He said the democratic changes in both countries last year have brought stable governments in both nations, which would help speed up economic development.

Modi said that "as Mauritius assumes greater responsibility for securing this part of the Indian Ocean, we know that our region will be a safer place. But, we share a broader vision for lasting stability and prosperity in the region".

"We seek a comprehensive partnership of closer security, economic, cultural, scientific and people-to-people ties in our region," Modi said and thanked Mauritius for the strong support for the UN Resolution declaring June 21 as the International Day of Yoga.

"We are blessed to have your friendship. And, I always say that if there is one country that has full claims on us, it is Mauritius. It a relationship of our hearts and sentiments. And, it will never be limited by boundaries. We in India will do everything to nurture it."

Modi also said that besides a stable government, both India and Mauritius have another factor in common: that he has to say "Madam Speaker" in parliament, in reference to the woman speakers in both countries - Sumitra Mahajan in India and Santi Bai Maya Hanoomanjee of the Mauritius. There was enthusiastic thumping of desks to this remark.

Earlier, Hanoomanjee said that Modi's presence epitomizes India's deep friendship and goodwill to Mauritius which "we happily reciprocate".