No real progress in tax treaty revision with Mauritius, says FM

New Delhi: Finance Minister P Chidambaram today said there has been no “real progress” on talks with Mauritius on revision of tax avoidance agreement with the island nation.

“Process has been under way for many years. I do not think there is any real progress,” he told reporters here. A Joint Working Group (JWG) was constituted in 2006 to put in place adequate safeguards to prevent misuse of the three-decade old bilateral Double Taxation Avoidance Convention (DTAC).

[caption id=“attachment_587612” align=“alignleft” width=“380”]  Mauritius accounted for about 38 percent of FDI inflows to India from April 2000 to April 2012. AFP[/caption]

Eight rounds of talks have taken place so far. Chidambaram said another round of meeting on the DTAC is scheduled in February or March. “Another date has been set now. Either February or early March, when Mauritius delegation comes here for discussion,” he said.

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India is likely to press for changes in the treaty so that information regarding source based taxation of capital gains could be shared between tax authorities, sources said. Government will also pitch for incorporating benefit limitation clauses in the agreement with a view to prevent ’treaty abuse'.

The DTAC, notified in 1983, provides for taxation of capital gains in the country of residence of the investor only. During his meeting with Mauritius Prime Minister Navinchandra Ramgoolam at Port Louis last week, Commerce and Industry Minister Anand Sharma had expressed the hope that the two nations would be able to move forward on the issue at the JWG meeting.

Mauritius accounted for about 38 percent of FDI inflows to India from April 2000 to April 2012.

PTI