Mauritius ready to review bilateral tax treaty with India: Ramgoolam

New Delhi, Feb 8 (ANI): Mauritian Prime Minister Navinchandra Ramgoolam on Wednesday said the island nation will address issues relating to the Double Taxation Avoidance Agreement (DTAA) with India.

Ramgoolam arrived in New Delhi for a six-day visit on Monday along with his wife Veena and a delegation comprising of senior ministers, officials and business representatives.

His visit is aimed at boosting Mauritius' trade and technological cooperation with India.

A meeting with Indian Commerce Minister Anand Sharma resulted in the signing of various agreements, including those aimed at expanding bilateral economic ties.

Addressing a joint statement after the meeting with Sharma, Ramgoolam asserted that his country did not want to become the hub of money laundering.

"Too often, the India-Mauritius Double Taxation Avoidance Convention has been, we feel, the butt of an unfair criticism, despite the fact that the vulnerability of the treaty has been upheld time and again in legal instances. There has been much of exaggeration. We also do not want to have round tripping, money laundering or corruption," said Ramgoolam.

The three decade old taxation treaty has often courted controversy for being misused by Indian and multinational companies to avoid paying tax or to route illicit funds.

However, Ramgoolam said Mauritius has acclaimed goodwill in the market.

He also lauded the recent Supreme Court judgement on Vodafone.

"We have a clean image, we have one of the cleanest image, we are at the high list in the OECD (Organisation for European Economic Co-operation) classification, so it is important for us as well... I think the latest Supreme Court judgment from India on the Vodafone case says it very clearly," he said.

Ramgoolam also touched on his Monday meeting with Indian Prime Minister Dr. Manmohan Singh, saying that he was assured that any decision made on the treaty would not affect Mauritius' economy.

"There were some concerns relating to the alleged misuse of the treaty and we have indicated and we have nothing to hide. We are quite prepared to address these issues whilst remaining guided by the assurance given to us by India that nothing will be done to hurt the economic interest of Mauritius," Ramgoolam said.

"This assurance was given to me by the honourable Prime Minister. We believe that we can find a mutually satisfactory solution and a win-win package that would address concern about alleged misuse while keeping the treaty meaningful," he added.

According to Indian officials, the country was losing more than 600 million dollars every year in revenue because of the tax treaty, besides incurring the risk of militant groups using it to route money into India.

A large proportion of foreign investment in the stock market comes through companies registered in the Indian Ocean island nation and are exempted from tax in India under the treaty.

Many Indian companies park illicit funds in Mauritius through shell companies as the standards for registering firms in the island are lax.

Capital gains is exempted from tax in Mauritius and under the DTAA, a Mauritian company cannot be taxed in India.

India has been insisting on review of the treaty since 2006 to tighten registration norms for its companies, but without any result. (ANI)