Tiger Global case bolsters Mauritius as base for India investments: Official
Mint. Mauritius Finance is the government-backed body that represents the country’s financial services sector. Last month, the Delhi High Court overturned an order of the Authority of Advance Rulings denying Tiger Global Management the benefits of the pre-2017 India-Mauritius Double Tax Avoidance Agreement (DTAA) on the capital gains made from selling its investments in Flipkart in 2018.
From April 2017, India and Mauritius dropped a tax provision that exempted Mauritius-based entities from capital gains taxes in India. Tiger Global claimed nil withholding tax on the capital gains on its Flipkart stake sale since the entities that had invested in Flipkart were based in Mauritius and established before 2017. However, the quasi-judicial body had decided in favour of the taxman, ruling that the investment was routed through Mauritius merely to avail tax benefits and there was not enough substance to the business there otherwise.
It denied the tax benefits to Tiger Global despite pre-2017 investments from Mauritius being grandfathered – meaning that they are exempted from taxation as per the new DTAA. The ruling that Tiger Global did not have sufficient substance in Mauritius was despite the fact that the funds used to invest in Flipkart held tax residency certificates, which are issued by the local tax authorities and can be used as proof for availing DTAA benefits. The favourable ruling by the Delhi High Court on 28 August has sent a clear message to Indian and Mauritian authorities that documentation issued by the authorities in other jurisdictions is not to be questioned, Jhummun said.
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