India has complained for years about the ease of ound tripping or Indian companies establishing in Mauritius and then reinvesting in India in order to cut down on taxes. In order to cut down on this practice the Indian government aims see an end to the provision in the India-Mauritius tax treaty which provides that capital gains from sale of securities in India can only be taxed in Mauritius.
More than 40% of foreign investment inflows to India are routed through the island, more than any other country. The island ranks first among all countries in Foreign Direct Investment (FDI) inflows to India, with cumulative inflows amounting to US$10.98 billion.
In its negotiations of other treaties after 2004, India has insisted on limiting the benefits clause with an anti-abuse provision. A similar clause is present in India double taxation treaties with Singapore and the United Arab Emirates.
Mauritius companies are also major investor in China, though China, though as of yet there have been no official complaints.
