"We will work together to avoid abuse of India-Mauritius double taxation treaty", Prime Minister Narendra Modi said on Thursday (12 March). "We will do nothing which could affect the vibrant banking sector in Mauritius", says Modi while addressing the country's National Assembly.
India and Mauritius have agreed to push forward their negotiations for a long pending revision of Double Taxation Avoidance Treaty (DTAT), asserting that their objective is to prevent the "abuse" of the convention.
Addressing a joint news conference with Modi, Jugnauth said he had raised with the Indian Prime Minister 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.
"Over the past few years, we have discussed revision of Double Taxation Avoidance Convention. This is based on our shared objective of preventing abuse of the Convention, while enabling Mauritius to benefit fully from this arrangement. We have agreed to continue this discussion," Modi said.
"However, I have assured Prime Minister that we will do noting to harm this critical sector of one of our strongest strategic partners in the world," he said.
Modi also said that Mauritius offered India cooperation on information exchange on taxation.
"I also conveyed our deep appreciation for the support and cooperation offered by Mauritius on information exchange on taxation," Modi said.
The (DTAA) is being revised amid concerns that Mauritius is being used for round-tripping of funds into India even though that country has always maintained that there have been no concrete evidence of any such misuse.
A Joint Working Group (JWG) has been set up by the two countries to find a mutually acceptable solution.
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