Mauritius to resume talks with India on CECPA

The Dollar Business Bureau 

Mauritius is eyeing to revive talks for a comprehensive economic cooperation agreement with India, which is on the verge of sorting out long-pending concerns with regard to the bilateral tax treaty.

The island nation in the Indian Ocean is a primary source of foreign direct investments (FDI) coming to India and is looking to a preferential trade agreement.

“Mauritius would resume negotiations with India on CECPA (Comprehensive Economic Cooperation and Partnership Agreement), said Pravind Jugnauth, Mauritius’ Finance and Economic Development Minister.

“Now that the issue of DTA (Double Taxation Agreement) with India has been resolved, the government will revive and finalise the negotiations with New Delhi on the CECPA including a Preferential Trade Agreement," Jugnauth said in his 2016-17 Budget speech recently.

During the fiscal of 2014-15, Mauritius was the single biggest FDI source for India, with equity investment inflows of $9.03 billion, 29 percent of the overall inflows in that financial year, as per the High Commission of India in Mauritius.

After long-drawn discussions, the change in the 1983 Double Taxation Avoidance Convention (DTAC) was agreed by both the nations in May this year. With the amendment, India can levy capital gains tax on the inflows routed via Mauritius.

Beginning from April 1, 2017, for the next two years, capital gains tax would be imposed at the rate of 50 percent of the existing domestic rate and post that, entire rate would be applied.

In his address, Jugnauth also expressed his thanks to India for the financial aid of $353 million (around Rs.12.7 billion), which Mauritius would get over a period of four-year.