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Money laundering: Information being shared with India, says Mauritius

Press Trust of India
May 17, 2013 at 02:48pm IST

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Port Louis: Facing allegations of being a route for round-tripping of funds and money laundering by Indian entities, Mauritius says it is fully committed to remain a credible financial centre and there has been 170 cases of exchange of information with Indian authorities in the past three years. Allaying the perception of Mauritius being a tax-haven, the government's investment promotion agency Board of Investment (BOI) also said that Mauritius on contrary is recognised as "a clean, efficient and compliant jurisdiction". This view is supported by global bodies like International Organisation of Securities Commissions (IOSCO), International Association of Insurance Supervisors (IAIS), Financial Action Tax Force (FATF) and Islamic Financial Services Board (IFSB), it said.

Besides, the country has one of the world's most stringent anti-money laundering legislations, showing the "pro-activeness of Mauritius to prevent any kind of illicit transactions from being structured in the country", the BOI said in its latest report on the Mauritian economy. "The Mauritius Revenue Authority has fully collaborated with information requests and remains committed to do so. In fact, over the last three years, effective exchange of information has taken place in 170 cases between MRA and the competent Indian authorities in India, of which some are even outside the framework of the DTAA," the BOI said.

India and Mauritius are now looking to revise their Double Taxation Avoidance Treaty (DTAA), which currently does not have provisions like banking information exchange. Mauritius Finance Secretary Ali Mansoor also said at an international taxation conference in Port Louis on Thursday that the two countries have finalised a new tax information exchange agreement, while discussions are continuing on the revised DTAA.

Money laundering: Information being shared with India, says Mauritius

India and Mauritius are now looking to revise their DTAA, which currently does not have provisions like banking information exchange.

While Mauritius accounts for almost half of the foreign money being invested into India, there have been concerns that the island nation was being used for money laundering and round tripping of funds after names of certain Mauritius-based entities came to light in some scams that have surfaced in India in recent years. The authorities in Mauritius, however, claim that no single case of round tripping or money laundering to and from India through this island nation has been proved so far and the regulations here are too strict for any such devious schemes to take place.

Talking about the allegations of being a tax haven, the BOI said the global standard-setting organisation in this regard -- OECD -- looks at three different factors while defining a tax haven. "First, the jurisdiction must have no or nominal taxes. Second, laws or administrative practices which prevent the effective exchange of relevant information with other governments and regulatory bodies must be present. And finally, there must be lack of transparency.

"Looking at the above definition, we clearly see that Mauritius cannot be classified as a tax haven in any way. The country has adopted a flat homogenised tax regime at a competitive rate of 15 per cent for both corporate and personal income tax.

"Tax resident entities operating under the Global Business Structure in Mauritius are also liable to pay taxes and can benefit from a partial tax credit of 80 per cent. "Moreover, Mauritius has signed a number of MoUs with leading financial centres and regulators around the world with respect to exchange of information," BOI added.

Mauritius currently has MoUs with 17 regulators, with two more MoUs to be signed shortly, while the country has 41 DTAAs and 37 IPPAs (Investment Promotion and Protection Agreements) with other jurisdictions. The country is today home to a large number of international investment companies and funds. It had more than 25,000 global business companies as on December 31, 2012, which included over 900 global funds, BOI said. In the World Bank's Ease of Doing Business index,

Mauritius is ranked first in Africa and 19th in the world.

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