It’s good to see that the Indian government is pressing ahead with its general anti-avoidance rule, or General Anti-Avoidance Principle as I prefer to think of them.
It’s also good to note that:
NDTV has learnt that the framing of the general anti avoidance rule or GAAR will also force a review of select bilateral tax treaties.
In fact, specific treaties might even be covered under the general anti avoidance rules with the Indo-Mauritius treaty being on top of the list.
The Mauritius double tax treaty has been massively harmful to Indian tax revenues. If this helps kill it, that’s very good news for tax compliant Indians.
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Highly unlikely that the Indian GAAR will “kill off” the Indo-Mauritian Treaty, but will attack treaty abuse particularly where Indian residents are round-tripping.
It is interesting to see that the GAAR has been watered down slightly from the initial draft of the DTC and that the sanctity of DTAs is upheld and that abuse targeted accords with what the OECD has been looking to target for many years.
So either Mauritius adopt a protocol putting the treaty on a similar footing with the Singapore India treaty or people relying on the existing treaty will have to take a chance in the courts.
Are there any numbers to support the statement that says “the Mauritius double tax treaty has been massively harmful to Indian tax revenues”?
From my own conversations with Mauritius partners over the years I got the impression that although a large amount of Mauritius holding companies that held Indian investments were set up, not many actually ever booked a dividend or realised a capital gain.
The Indian government over the years has so often tried to attack this treaty that people got reluctant to even try use its dispositions, perhaps?
@European Bear
There is a mass of data on the scale of the flows on the web
40% of Indian FDI comes through Mauritius for example http://timesofindia.indiatimes.com/business/india-business/India-asks-Mauritius-to-review-tax-treaty/articleshow/1322646.cms
Your hypothesis does not stack
See this too http://www.gfip.org/index.php?option=com_content&task=view&id=205