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Mauritius: Double Tax Treaties

Introduction

Mauritius has entered into a considerable number of double-tax treaties (unusually for a low-tax jurisdiction). Generally speaking, the treaty benefits are available to all Mauritian companies other than International Companies.

All of Mauritius' treaties are based on the OECD model treaty, and contain exchange of information clauses; however, the exchange is limited to matters concerning the working of the treaties themselves.

The treaty with India, which had underpinned the emergence of Mauritius as the dominant channel for FDI into India, came under attack from Indian tax authorities in 2002 as a result of alleged abuses by Indian-resident investors. After a series of high-profile court hearings, the status quo appeared to have been restored. However, rumblings from the Indian authorities with regard to the alleged 'abuses' are still continuing in 2011 and it was announced in June that discussions between the two countries to amend the treaty are to commence soon.

In October 2006, in an attempt to head off pressure from India to change the countries' Double Tax Avoidance Agreement, the Mauritian government announced that it would tighten up rules on the issuance of Tax Residence Certificates, and in future would issue them for only one year at a time.

Mauritius Minister of Finance, Rama Sithanen Mauritius said earlier that month that he was willing to co-operate with India to prevent misuse of the treaty.

"Let me state very clearly that we will collaborate to prevent any alleged misuse of the treaty," said Mr Sithanen, at a news conference on a trip to New Delhi. "But keeping in view historical, cultural, political and diplomatic ties between the two countries we need a global solution that will not penalise Mauritius."

He claimed that: "The problem of roundtripping has been eliminated completely."

In September that year, an Indian government official had said: “We are proposing to bring the DTAA with Mauritius on a par with the DTAA with Singapore. The DTAA with Singapore had included additional clauses to check round-tripping of investments.”

The new proposals were said to include a rule that only companies listed on a recognised stock exchange be eligible for capital gains tax exemption under the treaty, and that a company should have a total expenditure of USD200,000 or more on operations in the residence state (ie Mauritius) for at least two years prior to the date on which a capital gain arises. Under the treaty as it stands, there is a very basic residence requirement. These provisions would match those included in the India/Singapore treaty.

In January 2007, it emerged that talks between Indian and Mauritian officials would focus on changes to the two countries' Double Tax Avoidance Treaty.

Indian tax officials expressed the hope that Mauritius would stiffen the requirements for tax exemptions under the DTAA, and pointed to a new protocol that Mauritius had added to its treaty with China, under which capital gains arising in Mauritius on the sale of Chinese assets are subject to a 10% tax in China in some circumstances. The protocol came into force on 1st January 2007.

The Mauritian authorities had moved to placate the Indians in 2006, tightening up on the issuance of Category 1 Global Business Licence applications for Collective Investment Schemes, Private Equity Funds, Venture Capital Funds, Investment Companies, CIS Manager, and Investment Adviser/Managers; but India announced that it wanted further action before it would implement parts of the Comprehensive Economic Cooperation Partnership Agreement (CECPA) which will be highly favourable for Mauritian exports to India.

The DTAA with Indonesia, for somewhat similar reasons, was lapsed on 1st January 2005 after the Indonesian government gave notice of termination in 2004 and refused to discuss the matter. "The reasons given were that, following an assessment and evaluation of the implementation of the treaty, the Indonesian government has concluded that there was an abuse that was inflicting a loss upon Indonesia. The letter referred specifically to those foreign companies that are registered in Mauritius as Global Business Licence companies and to our domestic legislation tht enabled them to obtain tax dispensation or nullification on their business income from Indonesia," said the government.

In November 2008, a proposal by Japan Tobacco International's Mauritius operation to increase its stake in its Indian arm from 50% to 74% came under fire from several sides.

The increase was cautioned against by the Finance Ministry, which argued that allowing such a move would constitute a tacit approval of 'treaty shopping', a particular bugbear of the Indian authorities when it comes to companies routing investment via Mauritius.

In August 2009, India said that it is revising its double taxation avoidance treaties, especially those which were concluded prior to 2004. Its objective is to renegotiate anti-abuse provisions.

The following countries are among those which have double-tax treaties with Mauritius (an * indicates that the treaty is awaiting ratification):

  • Bangladesh
  • Barbados
  • Belgium
  • Botswana
  • China
  • Croatia
  • Cyprus
  • France
  • Germany
  • India
  • Indonesia (suspended)
  • Italy
  • Kenya*
  • Kuwait
  • Lesotho
  • Luxembourg
  • Madagascar
  • Malaysia
  • Mozambique
  • Namibia
  • Nepal
  • Nigeria*
  • Oman
  • Pakistan
  • Qatar
  • Singapore
  • Romania
  • Russia*
  • Rwanda
  • Senagal
  • Seychelles
  • Singapore
  • South Africa
  • Sri Lanka
  • Swaziland
  • Sweden
  • Thailand
  • Tunisia
  • Uganda
  • UAE
  • United Kingdom
  • Zambia
  • Zimbabwe

In 2006, a Protocol to the China-Mauritius DTAA was signed. The Protocol amended the Capital Gains and Exchange of Information Articles of the DTAA, making harder for Mauritius based companies investing in China to get a capital-gains tax exemption.

12 other treaties are being negotiated with: Algeria, Burkina Faso, Canada, Czech Republic, Greece, Monaco, Portugal, Republic of Iran, Saudi Arabia, St. Kitts and Nevis, Vietnam and Yemen.

Five other treaties are awaiting signature: Egypt, Malawi and Ghana.

Latest Mauritius Treaty Updates

Treaty Update: Guernsey - Mauritius
07 July, 2014
The DTA signed between Guernsey and Mauritius on December 17, 2013, will become effective on July 27, 2014.
Treaty Update: Mauritius - Ghana
27 May, 2014
Mauritius and Ghana agreed to launch negotiations towards a DTA on May 22, 2014.
Treaty Update: Luxembourg - Mauritius
31 January, 2014
According to preliminary media reports, Luxembourg and Mauritius signed a DTA Protocol on January 28, 2014.
Treaty Update: Mauritius - United States
15 January, 2014
Mauritius and the United States signed a TIEA and an inter-governmental agreement on December 27, 2013.
Treaty Update: Rwanda - Mauritius
18 November, 2013
The new DTA signed between Rwanda and Mauritius was forwarded to Rwanda's parliament during the week ending November 10, 2013, for ratification, Rwanda's embassy in Kenya has reported.
Treaty Update: Mauritius - Zambia
09 October, 2013
Mauritius has reported successful negotiations towards a DTA with Zambia during a five-day process, which concluded on September 27, 2013. At the conclusion of the meetings, the two parties agreed to soon sign and ratify the agreed pact.
Treaty Update: Mauritius - Guernsey
26 August, 2013
Guernsey and Mauritius commenced negotiations towards a DTA during three-day meetings concluding on August 14, 2013.
Treaty Update: Gabon - Mauritius
24 July, 2013
Gabon and Mauritius signed a DTA on July 18, 2013.
Treaty Update: Guernsey - Mauritius
25 June, 2013
The TIEA Guernsey signed with Mauritius on February 6, 2013, will enter into force on July 5, 2013.
Treaty Update: Mauritius - Nigeria
23 May, 2013
Mauritius and Nigeria signed two Protocols to amend their DTA on the sidelines of the 23rd World Economic Forum on Africa, concluding on May 10, 2013.
Treaty Update: Monaco - Mauritius
18 April, 2013
Monaco and Mauritius signed a DTA during a series of meetings during the weekend ending April 14, 2013, the Mauritius Government confirmed on April 17, 2013.
Treaty Update: Mauritius - Turkey
13 February, 2013
Turkey and Mauritius agreed to open negotiations towards a DTA at a meeting on February 7, 2013.
Treaty Update: India - Mauritius
11 January, 2013
The Indian government confirmed on January 9, 2013, that officials from India and Mauritius will reconvene to negotiate amendments to Indo-Mauritius DTA in February.
Treaty Update: Mauritius - Egypt
21 December, 2012
Representatives from Egypt and Mauritius signed a DTA on December 19, 2012.
Treaty Update: Nigeria - Mauritius
15 August, 2012
Mauritius's investment promotion agency has announced that Nigeria and Mauritius signed a DTA on August 10, 2012.
Treaty Update: Mauritius - Various
15 June, 2012
The government of Mauritius on June 8, 2012, confirmed that DTA negotiations have recently been finalized with Gabon and Nigeria.
Treaty Update: Mauritius - Denmark
13 June, 2012
According to preliminary media reports, the TIEA signed between Mauritius and Denmark entered into force on June 1, 2012.
Treaty Update: Finland - Mauritius
15 May, 2012
According to preliminary media reports, on May 11, 2012, Finland's parliament ratified the pending TIEA the signed with Mauritius.
Treaty Update: Mauritius - Norway
14 May, 2012
According to preliminary media reports, the TIEA signed between Norway and Mauritius in December 2011, is to enter into force on May 18, 2012.
Treaty Update: Mauritius - Kenya
10 May, 2012
Kenya and Mauritius signed a DTA on May 7, 2012.
Treaty Update: Mauritius - Luxembourg
17 April, 2012
According to Luxembourg's Ministry of Foreign Affairs, Mauritius and Luxembourg initialled a DTA Protocol on April 4, 2012.
Treaty Update: Mauritius - Various
13 December, 2011
According to the OECD, Mauritius signed TIEAs on December 1, 2011, with the Nordic countries, Iceland, Denmark, the Faroe Islands, Finland, Greenland and Norway.
Treaty Update: Bangladesh - Mauritius
07 December, 2011
According to preliminary media reports, on November 17 Bangladesh's Cabinet approved and forwarded to parliament a draft law that would ratify the DTA signed between Bangladesh and Mauritius.
Treaty Update: Italy - Mauritius
30 November, 2011
Italy's Cabinet on November 25, 2011, approved a law that would ratify the DTA between Italy and Mauritius.
Treaty Update: Mauritius - Germany
03 November, 2011
According to preliminary media reports, Germany and Mauritius signed a DTA and an accompanying protocol on October 7, 2011.
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