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LATEST NEWS UPDATES | New offshore records reveal several Indian firms tapped Mauritius route to save on taxes -Ritu Sarin, P Vaidyanathan Iyer, Jay Mazoomdaar and Sandeep Singh

New offshore records reveal several Indian firms tapped Mauritius route to save on taxes -Ritu Sarin, P Vaidyanathan Iyer, Jay Mazoomdaar and Sandeep Singh

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published Published on Jul 26, 2019   modified Modified on Jul 26, 2019
-The Indian Express

The Double Taxation Avoidance Agreement (DTAA) was signed between India and Mauritius in 1982. Under this, any entity could apply for tax residency and pay zero capital gains tax. This became the principal reason why Mauritius emerged as a top channel for investments being routed into India.

After Swiss Leaks, Panama Papers and Paradise Papers, come documents from Mauritius — over 200,000 emails, contracts and bank statements that show how the island nation was used by a long list of corporates to facilitate their partnerships with multinationals and, without paying any capital gains tax, remit profits as Foreign Direct Investment (FDI) to India.

At the heart of the 18-country collaborative investigation by the International Consortium of Investigative Journalists (ICIJ) and The Indian Express is data from Conyers Dill & Pearman, an offshore specialist firm which started operations way back in 1928 from Bahamas and in 2009 from Mauritius to cater to investments being routed to Africa and Asia.

The Double Taxation Avoidance Agreement (DTAA) was signed between India and Mauritius in 1982. Under this, any entity could apply for tax residency and pay zero capital gains tax. This became the principal reason why Mauritius emerged as a top channel for investments being routed into India. However, after 33 years in which there were several allegations of round-tripping and treaty abuse, Indian tax authorities amended the DTAA on May 10, 2016 and, for one, imposed capital gains tax, in a phased manner for two years, and fully applicable from April 2019 on.

That changed the game for companies like Conyers. Also, companies shifted their plans to invest via Mauritius and it lost its supremacy for being the country which brought in the highest FDI inflows. The figures reflected the shift and in the year 2018-2019, there was a 44% fall in FDI inflows into India from Mauritius in comparison to the previous year.

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The Indian Express, 25 July, 2019, https://indianexpress.com/article/india/offshore-records-reveal-several-indian-firms-tapped-mauritius-route-to-save-on-taxes-5843404/?fbclid=IwAR2_hepQ9npFTfqYzE9DFf


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