Finally, after about 33 years of the India-Mauritius tax treaty coming into force, the treaty has now been amended. What is the key feature of the amendment?. Recent news of India and Mauritius signing a Protocol to amend their 33 year old tax treaty caused seismic changes in the tax world. Though not completely. India and Mauritius have concluded negotiations with respect to the double tax avoidance agreement (India-Mauritius DTAA) between the two countries.
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India-Mauritius tax treaty: An end and a new beginning
In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:. Article 22 Other Income of the Convention shall be amended by inserting after paragraph 2 the following new paragraph:.
Article 27A inserted by Notification No. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that Contracting State and shall be disclosed only to persons or authorities including courts and administrative bodies concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above.
Notwithstanding the preceding provisions of this article, remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic, may be taxed only in the Contracting State in which the place of effective management of the enterprise is situated.
The provisions of Article 1, 2, 3, 5 and 8 of the Protocol shall have effect:. Clarification regarding agreement for avoidance of double taxation with Mauritius.
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The provisions of paragraph 1 of this article shall also apply to profits from the participation in a pool, a joint business or an international operating agency. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, inxia, quarries and other places of extraction of natural resources, ships, boats and aircraft shall not be regarded as immovable property.
In the case of divergent interpretation of the texts, the English text shall prevail. The competent authorities of the Contracting States shall exchange such information including documents or certified copies thereof as is foreseeably relevant indiw carrying out the provisions of this Convention or to the administration or enforcement of domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention.
The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article. The provisions of Article 6 and 7 of this Protocol shall have effect from the date of entry into force of mahritius Protocol, without regard to the date on which the taxes are levied or the taxable years to which the taxes relate.
The Double Tax Avoidance Agreement between India and Mauritius
Singapore and Mauritius, which have long been among the top destinations for routing investments into India, are struggling to stay relevant in the aftermath of the tax treaty amendments in that nullified a unique arbitrage opportunity for investors. The provisions of Article 1, 2, 3, 5 and 8 of the Protocol shall have effect: Soon enough, the Indian tax officers did not appreciate the prospect of perceived letter box companies in Mauritius claiming the tax exemptions and sent tax bills to them, alleging misuse of treaty.
GAAR seeks to give the Indian authorities powers to scrutinise transactions structured in such a way as to deliberately avoid paying tax in India.
Two years after India renegotiated its double taxation avoidance agreements DTAAs with Singapore and Mauritius, the two face the possibility of their importance as investment channels to the country fading.
The competent authorities of the Contracting States shall agree from time to time on the list of the information msuritius documents which shall be furnished on a routine basis. Home Forbes India India-Mauritius tax treaty: File Divorce in Delhi – Right Now! A Convention for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes of income and capital gains was entered into between the Government of India and the Government of Mauritius and was mmauritius on Mauritiuss provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a resident of a Contracting State carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated dtqa, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base.
To see your saved stories, click on link hightlighted in undia. However, when the activities of such an agent are devoted exclusively or almost exclusively on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.
Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be – a in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that Dyaa and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or b in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its indiaa, the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.
Globally too there was widespread resentment against companies failing to pay their fair share of taxes. In that case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
ANNEXURE The Government of the Republic of India and the Government of Mauritius, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains and for the encouragement of mutual trade and investment: When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange incia take place through a Commission consisting of representatives of the competent authorities of the Contracting States.
Interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:. Politically, this would be viewed as an achievement for the Government.
Paragraphs 3A and 3B inserted by Notification No.
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Foul language Slanderous Inciting hatred maritius a certain community Others. Notwithstanding the preceding provisions of this dtsa, the term “permanent establishment” shall be deemed not to include:. Majritius no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
The treaty provides for a capital gains tax exemption to a Mauritius resident on transfer of Indian securities. Notwithstanding the provisions of paragraph 2dividends paid by a company which is a indai of Mauritius to a resident of India may be taxed in Mauritius and according to the laws of Mauritius, as long as dividends paid by companies which are residents of Mauritius are allowed as deductible expenses for determining their taxable profits.
The changes, effected by way of a protocol amending the tax treaty India and Mauritius, come after many months of discussions and lays to rest speculation amongst the industry on the structuring of investments through Mauritius-based entities that have been rife for a while.
Any pension, other than a pension referred to in article 18, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State shall be taxed only in the first-mentioned Contracting State.
Royalties arising in a Contracting State and paid to a resident of the other Contracting State indiq be taxed in that other State. Two people with knowledge of communications between Delhi and Port Louis, on condition of anonymity, separately said talks to upgrade the DTAA will start soon.
A significant side effect of this amendment will be felt in the India Singapore DTAA which has a clause that provides tax benefits in respect of capital gains to Singapore based companies. Are not a shell company and, Satisfy the main purpose and bonafide business test. Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other Contracting State.
To protect investments already made, the protocol of the India-Mauritius DTAA allows for a grandfathering clause whereby gains arising from the sale of shares acquired before 1 st of April shall continue to be taxed as per the old article 13 4 and will be able to enjoy tax benefits as afforded by Ondia.
This Protocol shall enter into force on the date of the later of these notifications. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.