Mauritius yields to Indian pressure on information exchange

The Economic Times of India has reported that for the first time ever the Mauritian government has shared tax information with the Indian Tax Department.

India, which is in the process of renegotiating its existing double taxation avoidance agreement with Mauritius to include exchange of information clauses, is increasingly concerned about the volume of inwards investment routed through Mauritius, a secrecy jurisdiction which TJN awarded an opacity score of 96 percent in 2009 on the basis of its weak anti-money laundering arrangements, strong banking secrecy and poor commitment to international cooperation.

Opacity contributes to making Mauritius a useful centre for 'round-tripping' Indian capital shifted offshore and disguised behind offshore companies to be returned to India in the guise of foreign direct investment. The Economic Times reports that Mauritius accounted for about 42 per cent or USD 54.22 billion of the total USD 130 billion worth of foreign direct investment (FDI) in the country since April 2000. FDI receives tax and regulatory breaks that are typically not available to domestic investors, and holding capital offshore enables India's wealthy to evade tax on stunning scale.