Mauritius & Singapore compete for preferred tax gateways to India
PrintListen to this Article
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.
Category : Income Tax | Comments : 0 | Hits : 332
As many as 5,44,205 appeals were pending resolution with the Income Tax (IT) Department at commissioner (appeals) level as of January 31 this year, and 63,246 at various Income Tax Appellate Tribunals (ITATs), High Courts, and the Supreme Court, FE has learnt. To be precise, the cases pending in ITATs were 20,266 High Courts, 37,436; and Supreme Court 5,544. The large pendency is even as the Central Board of Direct Taxes (CBDT) has laid emphasis on disposing of income tax appeals in its 10...
The Central Board of Direct Taxes (CBDT) has facilitated taxpayers to file their Income Tax Returns (ITRs) for the Assessment Year 2024-25 (relevant to Financial Year 2023-24) from 1st April, 2024 onwards. The ITR functionalities i.e. ITR-1, ITR-2 and ITR-4, commonly used by taxpayers are available on the e-filing portal from 1st April, 2024 onwards for taxpayers to file their Returns. Companies will also be able to file their ITRs through ITR-6 from April 1 onwards. As ...
It has come to notice that misleading information related to new tax regime is being spread on some social media platforms. It is therefore clarified that the new regime under section 115BAC(1A) was introduced in the Finance Act 2023 which was as under as compared to the existing old regime (without exemptions): New Regime 115BAC (1A) introduced for FY 2023-24 Existing old Regime 0-3 lacs 0% 0-2.5 lacs 0% ...
The income tax department on Sunday said it has started sending emails and SMSs to assessees whose taxes paid during the current fiscal are not commensurate with financial transactions. To flag the mismatches in payment of taxes in financial year 2023-24 (assessment year 2024-25) and the financial transactions made by persons or entities, the Income Tax Department has started sending emails and messages through SMSs to assessees. The tax department on Sunday urged assesses, who have not pa...
Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in specified sub-clauses of section 10 (23C) of the Income-tax Act, 1961 (the ‘Act’) or any trust or institution registered under section 12AA/12AB of the Act is exempt, subject to fulfilment of certain conditions specified under various sections of the Act. Finance Act, 2023 provided that donations made by a trust...
Comments