New offshore records reveal that several Indian companies have exploited the Mauritian road to save tax

After Swiss Leaks, Panama Papers and Paradise Papers, come documents from Mauritius – more than 200,000 emails, contracts and bank statements that show how a long list of companies used the island country to facilitate their partnerships with multinationals and , without any capital gain tax, put profits in the form of foreign direct investment (FDI) in India.

Data from Conyers Dill & Pearman, an offshore company, which began operations in 1928 in the Bahamas and in 2009 in Mauritius, are at the heart of the collaborative survey conducted by the International Consortium of Journalists. of investigation (ICIJ) and The Indian Express. respond to investments sent to Africa and Asia.

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the Double Taxation Agreement (DTAA) was signed between India and Mauritius in 1982. Under this provision, any entity could apply for tax resident status and pay a zero capital gains tax. This has become the main reason why Mauritius has become the main route of investment in India. However, after 33 years in which several allegations of embezzlement and treaty were made, the Indian tax authorities amended the DTAA on May 10, 2016 and, for one of them, imposed the capital gains tax in a gradual manner for a period of two years. applicable from April 2019.

That changed the game for companies like Conyers. In addition, companies have changed their investment plans via Mauritius and Mauritius has lost its supremacy as the country that generated the largest FDI inflows. The numbers reflect this change and in 2018-19, Mauritius recorded a 44% drop in FDI inflows from India compared to the previous year.

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The Indian Express survey will provide details on how companies use the Mauritius road. These included:

* Conyers documents read with Paradise Papers show how Religare Enterprises Ltd (REL), a publicly traded company in India, channeled funds to a Jersey company owned by Malvinder Singh and Shivinder Singh. The details confirm how the Singh brothers and the companies they promoted were incorporated into tax havens and raised funds, invested in Indian entities and channeled to them.

* Conyers was a legal facilitator between the Pune-based real estate company, Kolte Patil Developers Limited (KPDL) and Portman Holdings LLC, a US-based real estate investment firm, responsible for the construction of several residential projects in India. . There are details of the $ 200 million Indian real estate fund announced in 2010-11 in which the two companies collectively invested $ 20 million.

* The records show relationships between a commodity trading giant and Jindal Steel and Power Ltd. regarding the ownership of four bulk carriers through the Mauritian company Pancore. In May 2012, this company placed orders with Chinese builders for four bulk carriers for $ 108 million.

* Conyers was a special legal advisor to iYogi Ltd, the Mauritian holding company operating in India and the United States, during its proposed NASDAQ listing in 2011, which has not materialized. Eventually, a court decision in 2018 almost shut down the business.

* The Mayo American Clinic and its subsidiary, Mayo Foundation, used in 2011 the Mauritian Highway to enter into a partnership with Apollo Hospitals and GMR to set up a high-end hospital near Hyderabad Airport. . The Mayo Clinic created a company called Mayo Mauritius, but the project did not start.

In response to a questionnaire from ICIJ, Dharmendar Sesungkur, Mauritian Minister of Financial Services and Good Governance, said: "The World Bank, the International Monetary Fund and the OECD … are unanimous in recognizing that Mauritius is a clean and cooperative jurisdiction.

Senior officials of the FT & TR group of the Indian Ministry of Finance (foreign taxation and tax reform), however, spoke on condition of anonymity to ICIJ and The Indian Express and admitted that the post 1983 (when the original DTAA with Maurice was signed) ensured led to "shopping shopping".

A key official from the Ministry of Finance said: "Due to this purchase procedure, no tax has been levied. It was so important that almost a third of FDI came from Mauritius. There was therefore a lot of concern in India. An effort was made in 1993 to revise the treaty. There was strong resistance from Mauritius. They have benefited from this because there is a lot of support and infrastructure, such as accounting firms and businesses that start businesses and make money from them. Maurice was not ready to renegotiate. Later, they agreed to join the renegotiations but did not agree to change it. In 2016, we convinced them. "