Is India about to renegotiate its tax treaties with Cyprus and Mauritius? What will happen to prospective and existing foreign investors if it does?
Ben Frumin investigates
The Indian Ocean island nation of Mauritius may be tiny – its population is roughly the size of Detroit’s and its GDP per capita ranks 87th globally – but it is still by far the biggest source of foreign direct investment into India.
Throughout the decade leading up to 2002, inflows to India from Mauritius were more than double those from the second largest investor, the United States, and the gap has only grown since.
Of course, this isn’t a true reflection of Mauritius’ home-grown economic might. Rather, a fateful quirk of economics. As a result of its double tax avoidance agreement (DTAA) with India, Mauritius has established itself as the preferred investment route into India for foreign investors, and has attracted more than 32,000 offshore entities, mostly aimed at commerce in India, South Africa and China, according to the CIA’s World Factbook.
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