DTA amendment: Mauritius - India

18/04/2024

Mauritius and India last month signed a second protocol amending their double taxation avoidance agreement (DTAA) to comply with the OECD's BEPS recommendations.

The protocol will enter into force once the countries have taken the necessary steps, and would be "without regard to when the taxes are levied or to the tax years to which the taxes relate".

The new protocol :

states that it is the intention of both Parties to eliminate double taxation with respect to taxes on income and on capital, without creating opportunities for non-taxation or for reduced taxation through fraud or tax evasion ;
and provides that any advantage granted under the Agreement shall not be granted if it can reasonably be concluded that the obtaining of the advantage was one of the main purposes of an arrangement or transaction (unless it is established that the granting of the advantage in such circumstances would be consistent with the object and purpose of the relevant provisions of the Agreement).

This news is raising concern among local operators as it could have an unfavourable impact on the tax advantages historically historically offered by Mauritius, notably through the introduction of the intention test. The uncertainty of its retroactive applicability is raising concerns among investors and financial sector players. For example some of these Mauritian financial players are arguing in favour of diversifying into other diversification into other activities, arguing that the future of the financial financial centre can no longer rely solely on its tax advantages.

For further information, please contact your local Mauritius office: office@rosemont.mu