Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
mains Test Series 2018
India and Mauritius agreed on revised tax treaty
Dec 10, 2013

Mauritius has agreed to sign "limitation of benefits" clause in the tax treaty with India to further ring-fence its jurisdiction from any attempts of round-tripping and money laundering activities. LoB clauses are typically aimed at preventing 'treaty shopping' or inappropriate use of tax pacts by third-country investors. 

The LOB clause limits treaty benefits to those who meet certain conditions including those related to business, residency and investment commitments of the entity seeking benefit of a Double Taxation Avoidance Agreement (DTAA). There is already a mechanism to prevent misuse of money laundering but the LOB clause will have the effect of bringing even more substance to companies which want to be tax resident. 

While a DTAA is already in place between two countries, it is being revised amid concerns that the Indian Ocean nation was being used for round-tripping of funds to and from India. 

Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.