India tightens India-Mauritius tax treaty to curb treaty-benefit abuse
India will tighten its tax treaty with Mauritius on Aug 10, allowing authorities to refuse benefits if a transaction’s main aim was a tax advantage.
The amendment to the India-Mauritius treaty, effective Aug 10, gives tax officials the power to deny treaty relief when they find that securing a tax benefit was a principal purpose of a deal. It targets Mauritius-based foreign portfolio investors, private equity and venture-capital funds, holding companies and special-purpose vehicles, putting them under closer scrutiny when claiming relief. The new rule lets authorities assess the purpose of transactions before granting benefits.
Why it matters
It closes a loophole that let some investors exploit the India-Mauritius treaty for tax avoidance.
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