8:53 AM
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As the debate over general anti-avoidance rules (GAAR) rages in the country, the governments of Mauritius and Singapore are heading to New Delhi to understand the laws and sort out issues regarding them.
While Mauritius’s minister of foreign affairs, international trade and cooperation, Arvin Boolell, is arriving on Wednesday, Singaporean Prime Minister Lee Hsien-Loong is scheduled to visit on July 11.
Boolell is likely to meet external affairs minister SM Krishna and commerce and industry minister Anand Sharma. According to sources, Boolell may also meet Prime Minister Manmohan Singh, who is currently holding the finance portfolio. In the recent months the finance ministry has drawn flak from investors, both domestic and foreign, for certain provisions under the general anti-avoidance rules (GAAR).
The provisions are most likely to impact investments coming from low tax jurisdictions like Mauritius, from where many investors route investments into India.
So far, Mauritian investors were getting the benefit of double taxation avoidance agreement (DTAA) by producing a tax residency certificate (TRC). However, with the amendments passed in the Budget 2012-13, the investors may be taxed and would also be covered under GAAR.
Concerned over the GAAR amendments, Mauritius Prime Minister Navinchandra Ramgoolam had written to Singh with a request to not apply the rules on companies that hold the TRC in the island country.
The visit of Lee is also significant given the new status of Singapore as a tax haven.
In order to shed that image, Singapore has also agreed to share tax related information dating back three years with India.
DELHI CALLING
* Mauritius minister of foreign affairs Arvin Boolell, is arriving on Wednesday and Singaporean Prime Minister Lee Hsien Loong is scheduled to visit on July 11
* Boolell is likely to meet external affairs minister SM Krishna and commerce and industry minister Anand Sharma
* Provisions under GAAR are most likely to impact investments coming from low tax jurisdictions like Mauritius