The principal attraction of the India-Mauritius Double Taxation Avoidance treaty is that a tax resident of Mauritius, such as a GBL1 company, is not liable to Indian capital gains tax on a sale by a Mauritian company of its shares in an Indian company.
When capital gains on the realisation of an Indian investment are received by the Mauritian company, no Mauritian tax applies to them so the investor can invest in India on a tax free basis.
Additionally, Mauritius, with its network of treaties, is an ideal platform from which Indian companies investing outside India can access the region. Indian investors have, for example, used Mauritius to become major players in Africa in recent years.
The key consideration for the Financial Services Commission (FSC), when determining whether a company should be granted a GBC 1 licence, is whether the company will be managed and controlled in Mauritius.
Any company wishing to avail itself of the DTAA between Mauritius and India must incorporate as a GBL1 company. A GBL1 Company will have at least 2 directors, resident in Mauritius, of sufficient calibre to exercise independence of mind and judgment; will maintain at all times its principal bank account in Mauritius; will keep and maintain, at all times, its accounting records at its registered office in Mauritius; will prepare or proposes to prepare its statutory financial statements and causes or proposes to have such financial statements to be audited in Mauritius and will provide for meetings of directors to include at least 2 directors that are resident in Mauritius.
Effective 1st January 2015 and in addition to the existing conditions above, a GBL1 company must meet one of the following criteria:
- has or shall have office premises in Mauritius; or
- employs or shall employ on a full time basis at administrative/technical level, at least one person who shall be resident in Mauritius; or
- chooses Mauritius as the seat for arbitration of disputes; or
- holds assets of at least US$100,000 in Mauritius; or
- is listed on the Mauritius Stock Exchange; or
- incurs reasonable expenditures in Mauritius.
Mauritius is famed for its India ‘know-how’ and OSMS has a broad experience and network for doing business or investing in India.