India and Mauritius agreed to amend their 32-year old tax bilateral tax treaty in attempt to keep a check on the outflow of black money and fix tax loopholes, The Times of India reported Wednesday.
The government has decided to impose capital gains tax on investments coming from Mauritius starting next year.
The tax will apply to investments made from Apr 1, 2017. It will be imposed at 50% of the domestic rate, now 15-20%, depending on the instrument and length of investment, until Mar 31, 2019, for companies already established in Mauritius. The full rate will apply for all companies after that.
The treaty signed in 1983 has been a cornerstone of Mauritius' rise as a financial centre, and it has allowed the country to become the source of the biggest foreign investments into India.
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