The equatorial island nations of Mauritius and Singapore are competing for the role of preferred gateway for foreign investments into India and other Asian countries. 

Think of it as a triangle, not of love, but of lucre. Companies and rich investors use gateway countries so they can earn profits in such places as India, China and Indonesia. Favorable tax treaties let them send dividends and other payments to such places as Mauritius and Singapore while paying little or no tax. The United States can even provide such benefits under some of its tax treaties. 

These treaties are sold to the public as vital to avoiding double taxation of the same money and thus encouraging cross-border investments. Countries with tax treaties that enable lightly taxed or tax-free profits can benefit if their rules require local work by accountants, bankers, executives, investment bankers and lawyers, who earn high pay and require little in government services. 

But just as tax laws can be drafted to fashion loopholes, so too can tax treaties. 

One of the biggest loopholes involves what is commonly known as "black money" and a circular movement of capital known as "round tripping." 

Black money refers to capital that is being hidden, sometimes from the tax authorities and sometimes from partners, litigants, estranged spouses or even criminals such as loan sharks or drug dealers. 

ROUND TRIPPING 

Round tripping involves getting the money out of one country, say India, sending it to a place like Mauritius and then, dressed up to look like foreign capital, sending it back home to earn tax-favored profits. 

The problem for the home country is that native profits escape taxation this way. And instead of foreign capital flowing into the country, local capital just gets a free ride.