The meetings of the Joint Working Group, scheduled for 23rd to 24th August in Port Louis, would enable the two parties to try to jump over the obstacles on a file where the challenges are sensible.
These consultations would enable the representatives of both countries to try to find a balance between the interest of Mauritius to defend the reputation of its financial services centre and the right of India to take all necessary measures to fight one of the scourges which gives cold sweat to some states. It is question of an offence of fiscal evasion on a great scale which is being practiced in the context regulated by some bilateral conventions.
Since some time now, they are glaring  at one another .The reason : suspicions that dispositions of the Treaty ,providing for a complete review of the Non Double Taxation Avoidance Treaty, would be used from Mauritius by fiscal evaders just to bypass the Revenue Authorities of India.
As two sensible friends, India and Mauritius have decided to meet around a table in Port Louis on 23rd and 24th August .It will be in the context of the consultations of the Joint Working Group. This Committee has in fact been set up with a view to examining all points associated with this Treaty and which are susceptible to feed a dispute between the two countries.
As a preview to this meeting, the Mauritian Government and the parties concerned by this Treaty are already sharpening their knives. The Global Institutional Investors Forum (GIIF) has already shared with Government the points which it intends to raise.The GIIF has fixed as mission to promote Mauritius as a centre for financial services of global repute.
The dispute, occasioned by a contested utilization of dispositions of the Treaty , is not so simple to solve as one would have thought. In the beginning, all was too beautiful and new, India saw nothing abnormal when Mauritius chose not to tax revenue coming from capital gains.The abuse of this procedure, legal in substance , in principle and in conception, makes teeth grind in India. The country has made it known at the level of the Lok Sabha by no less than the actual President of India ,Pranab Mukherjee, then minister of Finance.
The reason is simple. India loses money, lots of money from the Indian point of view, it is understood and it is not false. Because the actual dispositions constitute an open door to some who want to do round tripping .It''s the term used to qualify the action consisting in making one''s money transit in the financial centre of a country with which our own country has signed a treaty.
It''s not truly whitewashing, but it looks like. The demarcation line is that this money will bear the label of investment when it returns in the country of origin. But it''s fake investment. And the Revenue Service of the receiving country can''t do nothing to rid it of its status of investment, of its right of not being subject to taxation.
For Mauritius, it''s not a question of losing money but of the rules of the game or rather of the Treaty. Its position is simple : The maintaining of a situation whereby both countries are winners, each one in its own way. That is to say, it''s 50/50.India does not agree with that. It wants to change the rule of the game with the introduction of a legal instrument. It is question of the famous GAAR (General Anti-Avoidance Rule) so much opposed by countries having signed a treaty of Non Double Taxation with India .The GAAR which will be operational in 2013, will enable the Indian Tax Authorities to act when they suspect an investor of fiscal evasion.
“Yes to dialogue, however Mauritius should not succumb under pressure exercised by the Indian Authorities as such has been the case with Indonesia. Backing out is not an option, nor is abdication of our right to residence state taxation of capital gains arising out of Indian inbound investments. What constitutes the competitive edge of our Offshore Financial Services Centre over and above our main competitors strictly needs to be preserved”, insists Didier Picon, Managing Director at Murray & Collins OMC.
In spite of uncertainties that float on the destiny of the treaty between Mauritius and India, the Mauritian Government is going to this meeting of 23rd and 24th August with optimism, confident in the words of a friendly country which has indicated that India does not want to harm Mauritius but is confronted by a problem of fiscal evasion on its territory.