INDIA BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...

MAURITIUS TIGHTENS TAX RESIDENCY NORMS

 MAURITIUS has kept its word. The island nation has swiftly acted to do its bit to address issues raised by India on the alleged misuse of the double taxation avoidance agreement (DTAA). To stop New Delhi from pushing for a review of the treaty, Mauritius has tightened the procedures for obtaining the tax residency certificate, including ensuring that all banking transactions are routed though an account in Mauritius.

   The Mauritius revenue department issued a circular last week in this regard.The circular comes close on the heels of assurance given by Mauritius deputy prime minister and finance minister Rama Sithanen when he visited India in August. He had said Mauritius would ensure that the interests of both parties to the treaty are protected and any alleged misuse dealt with.

   AS per the circular, the companies will have to have two resident directors from Mauritius at all times. These directors should be of repute and must have requisite qualification. All the meetings of the board will have to held, chaired and minuted in Mauritius. The company will have to keep all its accounting records at its registered office in Mauritius. It will also have to ensure that all banking transactions are routed though an account in Mauritius. Companies applying for such certificate will have to furnish an undertaking on all these accounts every year when it is to be renewed.