The new framework of co-operation between Mauritius and India will not only include the sharing of information on Mauritius-registered foreign institutional investors and overseas corporate bodies, but also the investigation rights for questionable security market transactions on Indian bourses.
Sushil Khushiram, Mauritius minister of economic development, financial services and corporate affairs, told Business Standard that his country's financial intelligence unit would open another communication channel with India on money laundering.
We expect to sign a memorandum of understanding with India on this next year, he said.
According to Khushiram, the law, which replaced the Mauritius Offshore Business Activities Authority with the more powerful Financial Services Commission in December 2001, now provides for information-sharing between the commission and the Securities and Exchange Board of India.
We are finalising the text of the agreement with Sebi, which will lay out clear guidelines on the exchange of sensitive information, he said.
Any request for information from India should be supported by prima facie evidence, Khushiram said, adding that the scope of the MoU also provided for the sharing of unsolicited information in cases of fraud and malfeasance. Tax-related issues between the two countries could be dealt with under the double tax avoidance agreement, he said.
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Once the three distinct channels of communication on market irregularities, tax issues and money laundering were in place, there would be no need to review the double tax avoidance treaty, Khushiram said.
The contribution of offshore business to the gross domestic product of Mauritius was almost 2 per cent, the minister said, adding that the aim was to increase it to around 5 per cent in the next five years.
The contribution of the financial sector to the GDP was about 10 per cent, he said.
Khushiram said Mauritius was also keen on attracting investment from India. He said in order to promote the inflow of funds in the information technology sector, the corporate tax on foreign infotech companies in Mauritius was just 5 per cent, compared to the normal rate of 15 per cent. Infosys Technologies was in the process of setting up a disaster recovery cell in Mauritius, he said, adding that several companies like Wipro, Satyam and Tata Consultancy Services had also shown interest.
Refuting that Mauritius was a tax haven, Khushiram said, the country relied largely on indirect taxes for income.
Nearly 80 per cent of the total tax revenues come from indirect taxes, he said.
The corporate tax rate in almost all the sectors was just 15 per cent, the minister said, adding that the companies were offered a variety of tax incentives, besides such a low rate.