It`s a bit mysterious, because India also renegotiated its double tax evasion deal with Singapore in 2016 to fill exactly the same loopholes as Mauritius, which was a capital gains-based tax on the sale of shares. Perhaps Singapore`s strengths other than the financial hub, such as the ability of companies to raise funds at comparatively low interest rates, and that an effective dispute resolution system continues to be a preferred place for Indians to start businesses. After renegotiating its agreement on double tax evasion with Mauritius in 2016, India has seen some positive developments. First, a brief summary: the essence of the 2016 renegotiation was to close the central loophole that made Mauritius a preferred investment route to India. The loophole was the residence-based tax on capital gains from the disposal of the shares. Shorn of jargon, which means that if a Mauritius-based company invests in shares in a company based in India and then sold those shares and made a profit, they would have to pay capital gains tax in Mauritius. In practice, Mauritius does not collect capital gains tax! This loophole was closed in 2016 and from now on there would be a source-based tax on capital gains. This means that if Mauritius-based companies sold shares in an India-based company, India would collect capital gains tax. Naomi is the creative strategist for the Tax Justice Network. It also produces and presents the Taxcast, the Tax Justice Network`s monthly podcast/radio show. She also runs the tax Justice Network`s monthly podcasts/radios in Spanish – Justicia ImPositiva, Arabic – French – Impéts and Social and Portuguese Justice – é da sua conta. She has produced programs for radio stations around the world for 15 years, has been a program director for a radio station in Latin America, and has lived and worked in different countries. She currently lives between London, Sicily and Spain.
This treaty was amended after years of negotiations between the two countries. From 2017, Mauritian investors will gain capital in half of India`s interest rate (7.5%) Taxed. until 2019, after which the full tariff will apply. This actually removes the incentive for tax evaders to move funds through Mauritius, because they are taxed anyway. In this sense, it fills a great loophole. It is also one of the means sought in my dissertation and it is a stroke of luck that we have acted so quickly on this issue. The agreement on double tax evasion between India and Mauritius, between India and Mauritius, provides for a possible tax exemption for foreign investors, under which Mauritius is considered one of the preferred investment channels in India, which exempts capital gains tax from the sale of shares in an Indian company. In the past, Indian revenues have called into question the granting of capital gains tax exemption under the tax treaty, on the grounds that the Mauritian company has no real commercial substance and was created solely for the purchase of contracts. This approach has resulted in lengthy and significant litigation in a number of cases where investments have been made in India through Mauritius. Article 13, paragraph 4, of the DBA provides that profits made by a resident of a contracting state as a result of the disposal of the shares are taxable only in that state.
In addition, in some 789 of 13.04.2000, the Central Direct Taxes Council (CBDT) specified that under Article 13, paragraph 4 of the DBAA, each resident of a state designates any person taxable under the laws of that state. In one of these prestigious court proceedings, the Supreme Court of India, after taking note of the provisions of the Treaty and circular CBDT No.