A preferred jurisdiction

Over the past decades, the global business industry in Mauritius has been quite active, mainly for inbound investment into India, Africa and China. As the double taxation treaty between Mauritius and India (the Mauritius treaty) is more favourable compared to other jurisdictions, Mauritius has become the preferred jurisdiction for providing foreign direct investment into India. As a result, many investment and/or hedge funds were incorporated in Mauritius for the purpose of investment into India.

For example, the income of a Mauritius fund will be subject to income tax in Mauritius at the rate of 15%. However, the Mauritius fund will be allowed a credit for foreign tax on income not derived from Mauritius against the Mauritius tax, computed by reference to that same income. If no written evidence is presented to the Mauritius Commissioner of Income Tax showing the amount of foreign tax charged, the amount of foreign tax...