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Mauritius Turns Into A Tax Haven

A Historical Perspective

by Shiva Kant Jha


I had written this article when I was preparing to argue the Indo-Mauritius Tax Treaty Abuse Case. The Delhi High Court decided in Shiva Kant Jha v. Union of India (2002) 256 I T R 563 (Del.), but It was reversed by the Supreme Court in Union Of India & Anr. V. Azadi Bachao Andolan & Anr (2003-(263)-ITR-0706-SC). I had written this article in course of my research conducting that PIL. As the matters relating to the Indo-Mauritius Tax Treaty have kept on vexing us over all these years, and as we have good reasons to reflect on many things which are happening in Mauritius, I have thought it appropriate to put this article in the public domain for the information of our government and people. A study of the article would equip our Government how to go about the Mauritian position on the existing Tax Treaty (I mean the Indo-Mauritius Double Taxation Avoidance Convention).

Please note that on many points you will find this article outdated. I am sorry to say that I have not been able to update it. Hence you may find this article missing some the points and issues of current relevance. But it will surely give you a perspective on the issues, and would help how I perceived things whilst I conducted the PIL before the Delhi High Court and the Supreme Court. Many chapters in my book, On the Judicial Role in Globalised Economy deal with the important legal and constitutional issues which I had considered over several years I conducted the Indo-Mauritius Double Taxation Avoidance Convention. For the benefit of the readers I intend to put the text of that book on internet soon so that every one can read the book.

The Judgment: What it means

A Critique on the Misuse of the Indo-Mauritius Double Taxation Convention

Mauritius Turns Into A Tax Haven


Economic Zeitgeist and the Mauritian Initiative

1 . Mauritius, officially now known as the Republic of Mauritius, is an island in the Indian Ocean extending 38 miles from north to south and 29 miles from east to west. Its Modern History is shaped by a matrix of exogenous influences. Till the Treaty of Paris (1814) it was under the French domination; thereafter the British Control was established. Mauritius became independent in 1968 with in the Commonwealth of Nations in 1991 it became the Republic. Its population is 1,195, 000. Its ethnic composition is: Indo-Pakistani 67.0 %, Creole 27.4%, Chinese 3.0%, others 2.6% On the basis of religious affiliations the population consists of: Hindu; 50.6%; Roman Catholic; 27.2%; Muslim; 16.3%; (1990): Protestant; 5.2% Buddhists ; 0.3%; others; 0.4%.

2. It is a great tribute to this small country which on its five inches of ivory wrought with remarkable dedication a political society with rich achievements in the fields of social and economic developments. Some of the figures of some select segments are tabulated along with the comparable figures of the similar segments of our country.

Sr. No.

Some select indicators *1




Life expectancy at birth

Male 67.0 years

Female 75.0 years

Male 61.9 years

Female 63.1 years


Per capita income

USD 3,540

USD 440



Males literate 87.1 %

Females literate 78.8 %

Males Literates 75.8 %

Females literates 54.2%



Physicians 1 per 1,123 persons, Hospital Bade 1 for 303 persons

Physicians 1 per 2,173 persons, Hospital Bade 1 per 1364 persons.

3. The people of Mauritius cultivated strong public opinion to keep the government under critical gaze. Even in the year 1982 when the Indo-Mauritius DTAC was negotiated Mauritius had given evidence of this. “In general elections held on June 11, 1982, the coalition government of Prime Minister Sir Seewoosagur Ramgoolam, which had governed the islands since before independence in 1968, was defeated. World recession, the effects of three cyclones, and record unemployment all contributed of his defeat.”2It is this assertiveness of the common people that enabled the opposition to win a sweeping victory in the elections held on September 11, 2000. The way the opposition parties shorted out the contesting claims of the rival contenders for the post of the Prime Minister deserves appreciations. They agreed that Sir Anerood Jugnauth, the leader of the Mauritian Socialist Movement, would function as Prime Minister for 3 years after which Mr. Paul Berenger, the leader of the Mauritian Militant Movement was to become Prime Minister for the remaining two years of the term. This arrangement has worked, and now Paul Berenger is the Prime Minster, the first non-Hindu to become so after independence.

4. The achievement of Mauritius have in recent years been so outstanding that many considered it appropriate to speak of “economic miracle”. While it a lot to improve its performance in traditional economy its most ambitious affords were to make Mauritius an important regional economic and transportations centre. Its commitment to enrich itself with the gifts of information technology is part of the same grand design to scale higher excellence in economic development. In this pursuit it strove with astuteness in developing context and collaboration with many countries and got good assistance form the IMF. Through sustained efforts it effected economic recovery achieving economic growth of 7.1% in 1986 as against 6.5% in 1985 : “the highest recorded in Africa ” It liberalized its economy and developed trade and commerce its sense of great commitment by 1988 it was nearing economic miracle. Guy Arnold by appraising indicators for 1988 writes :

“The growth of Mauritius 's manufacturing sector was one of the success stories of the third world. Based mainly on the export processing Zones (EPZs), manufacturing accounted for 53% of exports, surpassing sugar. The EPZs contained over 500 companies employing 90,000 people. The high level of education was seen as a key to this success; virtually all primary-age children attended school, and a high proportion of them went on to secondary school. The success of tourism had created its own problems. Sir Gaetan Duval, minister of tourism, suggested that 300,000 arrivals a year were the most the island could accommodate. Sugar still dominated the agricultural sector; the current crop stood at approximately 650,000 metric tons, 540,000 tons of which were exported.3

In 1988 it established a stock exchange and open its first offshore bank. Foreign exchange restrictions were greatly relaxed so that free repatriations of capital and dividend could take place. Its saw the tremendous potentialities of offshore banking, and worked over the years to make the country an important financial centre. On realizing the potentialities of information technology it fell in love with it, and now is working to make a cyber city to reap. The 2002 Britannic Book of the Year writes:

“In January Berenger announced the creation of the Infocom Development Authority to manage growth in the information-technology sector: India agreed to provide Mauritius with a $100 million line of credit for the development of a “cybercity” technology-development centre. A number of Indian software companies also announced that they would invest in the project.”

Much credit for the achievement of Mauritius must go to the high standard of education maintained in the countries academic institutions. It appears it understood well what H G Wells said : “Human history becomes more and more a race between education and catastrophe.”

5. The advancement which Mauritius has made over the recent years should be considered in the context of the economic and social indicators4 of 1984. The Indian figures are also given for comparison.

Sr. No.

Some select indicators *5




Life expectancy at birth

Male 63.3 years

Female 68.4 years

Male 53.9 years

Female 52.9 years


Per capita income

USD 1,075

USD 249



Males literate 90.5 %

Females literate 78.8 %

Males Literates 46.7 %

Females literates 24.9%



Physicians 1 per 1547 persons, Hospital Bade 1 for 335 persons

Physicians 1 per 2,554 persons, Hospital beds 1 per 1269 persons.

6. In Eighties Mauritius faced many inconvenient problems. As one of the most densely populated countries it needed sovereignty of the Chagos Archipelago both for its burgeoning population and for strategic purposes. In August 1982 Prime Minister Indira Gandhi visited Mauritius , and supported its claim to the Chagos . It is to be noted that the Indo-Mauritius Convention was done at Port Louis on 24 th August 1982. In early Eighties the Mauritian economy was through a difficult time. Its economy largely depended on sugar production for which demand declined. “Meanwhile, the balance of payments deficit had grown alarmingly. For its size, Mauritius was one of the world's most indebted nations, with debts amounting to ê 432 million in March.6


The Indian Context

7. When Mrs. Gandhi return to power in 1980 she found herself in a different ethos. Trials and tribulations which she under went during the Janta regime must have told on her psyche. She was no longer that Indira Gandhi. She worked with iron in her soul. She had seen how time-servers and go-getters change their colors. She had experienced the Irony of the inconstant in the ways of the world. She maintained her majesty but had lost her verve. During this phase Sanjay Gandhi played an effective role as her political aid. With his dynamism and assertiveness he formed a caucus which wielded enormous clout. Mrs. Gandhi became greatly pre-occupied with major political problems which had acquired dangerous proportion. Economic management was substantially left under the care of Sri Pranab Mukherjee who had been the Finance Minister. Sri Mukherjee whose financial acumen has been appreciated by no less a person than Sri R. Venkatraman, was close to the lobbyists and in many matters was not above board. The go-getters and the financial adventures proliferated their influence.

8. “Since 1980-81, particularly since 1983-84, the current account deficit has increased steadily and alarmingly.”7 Now there was a growing dependence on foreign private credit. “Following her return to office in January 1980,, Mrs. Gandhi had been interested in encouraging greater NRI involvement in the Indian economy. There were two reasons for this: her emotional instinct that NRIs should be linked to their motherland, and her desire to improve the economy.8 ” Dr. Manmohan Singh, the then Governor of the Reserve Bank of India indorsed the NRI portfolio investments. Massive efforts were made to perused to NRIs to make investment in India . How the scheme worked is beyond the scope of this book. But there is an interesting account of his bitter experience of investing in India has been drawn by Swraj Paul in his memoir, Beyond Boundaries. Describing how things stood before 1991 Bimal Jalan observes :

“ India was, however, one of the few developing countries which continued to follow a highly restrictive policy towards foreign investment in the 1980s . Until mid-1991, there was virtually no change in the framework of rules and regulations governing flows of foreign investment. Such investment was permitted on a case-by-case basis in new projects, provided the technology accompanying such investment could take place was also restricted to a specified list of industries.9

And after 1991 Indian economy was opened up inviting foreign investments on attractive terms the details of which are beyond the scope of this chapter.

9. In some measure of corruption has been endemic India's public life in the post-independence era. It grew alarmingly during the darkness of Emergency. During Mrs. Gandhi's term after return to power it waxed more scaling sinister heights during the periods when Rajiv Gandhi and Narasimha Rao were the Prime Ministers.

10. In all probability, the terms of the Indo-Mauritius DTAC were devised for the benefits of those Indians who wanted to use Mauritius as a route for investing in India their tainted wealth amassed outside the country. NRI investment through Mauritius would have been attractive in the early Eighties only for such Indians. The third country residents were not likely to invest in India through the Mauritius route. Because of socio-religious affiliations numerous context could be forged for parking ill- gotten money in Mauritius wherefrom this could be strategically managed effectively. And investment in India made by such masqueraders would be entitled to benefits under the Indo-Mauritius DTAC. This could not have been possible unless the lobbyists would have succeeded in influencing the Finance Minister and the senior bureaucrats. Those who negotiated on behalf of our Central Government were bound not to transgress constitutional and statutory limitations. The terms of the Indo-Mauritius DTAC show that they negotiated the terms of the treaty in violation of the statutory and constitutional limitations. Secondly, and without prejudice to the above argument, the adoption of the OECD Model for framing the Convention was highly in proper. It is a matter of record that our government was party to the deliberations which preferred the UN model. The adoption of the OECD model for the Indo-Mauritius DTAC must have been with some extrinsic motive.


Mauritius turns into a tax haven

11. The tax havens in the West Indies are the conjoint product of the necessity utilized by the unscrupulous tycoons of the super rich countries. Switzerland , as a tax haven, is a product of history. Mauritius became a tax haven by way of design. She could have evolved economically even without turning into a tax haven. But in the early Nineties it browsed the international scenario to find that a new chapter had began in global economic management. India had opened up its economy : and was eager to welcome foreign investments. Mauritius knew that her native resources were not sufficient to invest in India either as foreign direct investment or as portfolio investment. But it could become a good route for making investment by the residents of other countries. There are good reasons to believe that the persons who matter in government knew this : in fact, they assiduously promoted this more often by silence. Mauritius had sufficient experience of offshore banking. While her main object was to gain some financial advantage by becoming a secretive intermediary between India and the resident of other countries it must have felt the possibilities of its offshore financial-services as Mauritius had developed wide international context, specially in Africa, through its trade and commerce.

12. That in 1992 Mauritius underwent great change to became tax haven. Two very significant developments in 1992 coincided, and fortunately served to make Mauritius a Tax Haven Country:-

1. The Mauritius Offshore Business Activities Act (MOBAA) came into existence in 1992 and

2. Relaxation of regulation and controls by the Indian Government on direct foreign investment into India took place in 1992, Notably, on 15 th September, 1992, guidelines for direct investment by foreign institutional investors (FIIs) were announced.

That the NRIs and the FIIs and their advisors quickly spotted the bonanza of avoiding Capital Gains Taxes (short term as well as long term ) in India by making use of the Article on Capital Gains in the Double Tax Avoidance Agreement between India and Mauritius. While off-shore companies are exempt from taxation in Mauritius they can at their option, pay a tax of between 0% and 35% As the provisions do not subject such companies to mandatory obligation, they do not subject them to liability to tax.

13. That Mauritius enacted the International Companies Act, 1994. Offshore Corporate laws were embodied in MOBAA 1992 which deals with the incorporation and regulation of Ordinary Companies and in the International Companies Act 1994 which deals with the incorporation and regulation of International Companies (ICs). An ordinary company that satisfies the requirements of the Mauritius Offshore Business Activities Act 1992 may be incorporated under the Companies Act 1984 and is registered as an offshore ordinary company. With the coming into effect of ICA 1994, existing companies holding investments in India and located in other offshore jurisdictions are able to migrate to Mauritius as “ an IC” and, thereafter, convert themselves into Ordinary Companies without having any capital gains tax or stamp duty implications in India. An IC is exempted form the provisions of Income Tax and will not be treated as a resident in Mauritius for the purposes of any tax treaty entered into by the Government of Mauritius. Only companies incorporated under the Companies Act 1984 and residents in Mauritius may access the benefits of the double tax treaties that Mauritius has entered into with various countries. The Companies Act 1984 governs the incorporation and administration of all companies formed in Mauritius other than international companies. These offshore entities in Mauritius enjoy various incentives which included tax exemption, free repatriations of profits without being vexed exchange control provisions, no withholding tax on dividends, interests, royalty and other payments made by an offshore ordinary company to the non-resident of Mauritius, and no tax on capital gains.

14. That the Offshore Companies were subjected to certain restrictions in matters of holding property in Mauritius, and in conducting certain transactions with the residents of that country under Sections 26 and 27 of the Mauritius Offshore Business Act 1992. Section 26 (1) prescribed that an offshore company “ shall not hold-

(a) immovable property in Mauritius ;

(b) any share, debenture, or any interest in any company incorporated under the Companies Act 1984 other than in a foreign company or in another offshore company or in an offshore trust;

(c) any account in a domestic bank in Mauritius Rupee.

And section 27 imposed certain restrictions in dealings with residents : its prescribes -

“Notwithstanding any other enactment, the Authority may authorise any offshore company engaged in any offshore business activities to deal or transact with residents on such terms and conditions as it thinks fit”.

15. That Articles 10 and 13 of the Indo-Mauritius Double Taxation Avoidance Convention pertain to the taxation of Dividend and Capital Gains. The effect of the Article 10 is that the recipient of dividend is liable to tax both in the country in which company paying dividend is “resident” and in the country in which he himself is a “resident”. The tax liability in the former is, however, restricted under the treaty to 2 rates (a) 5% of the gross amount of dividends if the beneficial owner is a Company holding directly atleast 10% of the Capital of the dividend, paying Company and (b) 15% of the gross amount of dividends in all other cases. The Article 13 relating to Capital gains prescribes that though gains form alienation of immovable property are taxed in the country in which such property is situated, gains derived from a movable property (other than movable property pertaining to a permanent establishment) shall be taxed in the country in which the owner of the movable property is a resident. The Mauritius Offshore Business Activities Act 1992 contemplates per section 28 (1) a continuation of offshore company in these words ;

“A foreign company incorporated under the laws of any country other than Mauritius, may where it is so authorized by the laws of the country, apply to the Registrar to be registered as being continued in Mauritius as if it has been incorporated in Mauritius under the Companies Act 1984 and a company incorporate under the Laws of Mauritius may apply to the Registrar to be deregistered in Mauritius for the purpose of being continued in another country.”

16. Confidentiality : The section 15 of the Mauritius Offshore Business Act 1992 provides almost total confidentiality: it says-.

“ The Authority and every member, officer or employee shall deal with all documents and other information in its possession or under its control concerning protected persons and all matters concerning such persons in respect of their offshore business activities, as secret and confidential , and shall not seek to identify these persons.

“Protected person” means an offshore company, the beneficial owner and shareholder of an offshore company lawfully carrying on offshore business activities under this Act. The statutory policy on confidentiality is indicated by the limitations to discloser even to the courts. Its is true that section 15 (5) (a) state that this section is without prejudice to “the obligations of Mauritius under any international treaty convention or agreement, and to the obligations of any public sector agency under any international arrangement or concordat.” On this provisions the following comments are worthwhile:

(i) The obligation under Article 26 of the Indo-Mauritius DTAC is about exchange of information which is hardly adequate to determine the issues relating to real residency and beneficial ownership. This point would be discussed in the chapter dealing with this DTAC.

(ii) The obligations to which section 15 (5) refers are restricted by the terms of the Convention which are not broad enough to ensure full disclosure.

(iii) The Competent Authorities have neither jurisdiction nor power to conduct investigation and to enforce compliance.

(iv) As a tax haven Mauritius follows a public policy of secrecy : so it interpret treaty terms and the statutory provisions in the light of its administrative commitments as a tax haven. The OECD in its report on Harmful Tax Competition An Emerging Global Issue has discussed how lack of transparency is effected because :

(a) “Favourable administrative rulings (e.g., regulatory, substantive, and procedural rulings) are given, allowing a particular sector to operate under a lower effective tax environment than other sectors…..”

(b) “Special administrative practices may be contrary to the fundamental procedures underlying statutory laws…...”

(c) If the general domestic fiscal environment is such that the laws are not enforced in line with the domestic law, this could make an otherwise legitimate regime harmful…..”


Mauritius has all the features of tax havens

17. The OECD identified the following features of a tax-haven :

a) no or nominal effective tax rates;

b) lack of effective exchange of information;

c) lack of transparency;

d) absence of a requirement of substantial activities

Richard Doernberg and Luc Hinnekens after close analyses of the realities operating in the tax-havens succinctly summarized the dominant features are the tax-havens in these words;

“ The OECD report defines a tax haven as “a jurisdiction actively making itself available for avoidance of tax which would otherwise be paid in relatively high tax countries.” To be useful to non-resident individuals and corporations, tax havens usually have the following characteristics which bolster their appeal as a location for commercial enterprise, while at the same time allowing a reduction or avoidance of tax in the individual or corporation's country of residence : low taxes (or none at all) on certain types of income and capital ; high levels of banking and commercial secrecy; absence of exchange controls on foreign deposits of foreign currencies; a disproportionately large financial sector; modern communications facilities, including sea and air transport; self promotion as an offshore financial center; and few or no tax treaties providing for ex-change of information.”11

In fact the core feature of a tax haven is that it is establishes an opaque system. OECD in its reports on Harmful Tax Competition : An Emerging Global Issue identifies a tax haven and its factors with remarkable precession : to quote -

A tax haven :

“Many fiscally sovereign territories and countries use tax and non-tax incentives to attract activities in the financial and other services sectors. These territories and countries offer the foreign investor an environment with a no or only nominal taxation which is usually coupled with a reduction in regulatory or administrative constraints. The activity is usually no subject to information exchange because, for example, of strict bank secrecy provisions. As indicated in paragraph 42 and 43, these jurisdictions are generally known as tax havens.”

Factors to identify a tax haven :

“ The necessary starting point to identify a tax haven is to ask (a) whether a jurisdiction imposes no or only nominal taxes (generally or in special circumstances) and offers itself, or is perceived to offer itself, as a place to be used by non-residents to escape tax in their country of residence. Other key factors which can confirm the existence of a tax haven and which are referred to in Box I are : (b) laws of administrative practices which prevent the effective exchange of relevant information with other governments on taxpayers benefiting from the low or no tax jurisdictions; (c) lack of transparency and (d) the absence of a requirement that the activity be substantial, since it would suggest that a jurisdiction may be attempting to attract investment or transactions that are purely tax driven (transaction may be booked there without the requirement of adding value so that there is little real activity, i.e. there these jurisdictions are essentially “booking centres”)

From the system which characterizes a tax haven the following consequences take place:

(i) “Because non-transparent administrative practices as will as an inability or unwillingness to provide information not only allow investors to avoid their taxes but also facilitated illegal activities, such as tax evasion and money laundering, these factors are particularly troublesome.”

(ii) “…tax administrators lack the power to compel such information from it situations, and they cannot exchange information under tax treaties or under other types of mutual assistance channels. The most obvious consequence of the failure to provide information is that it facilitates tax evasion and money laundering.”

(iii) “In addition, the absence of a requirement that the activity be substantial is important because it suggests that a jurisdiction may be attempting to attract investment and transactions that are purely tax driven. It may also indicate that a jurisdiction does not (or cannot) provide a legal or commercial environment or offer any economic advantages that would attract substantive business activities in the absence of the tax minimizing opportunities it provides.”

Through legal provisions Mauritius ring fanced its domestic economy.

18. Of late the world has recognized a hazards of money laundering and the user of tax haven routes for financing criminal activities. Efforts have been made at the international level also. What has been done in this field has been thus summarized in 2001 Britannica Book of the Year;12

“At the international level, the Financial Action Task Force on Money Laundering in June 2000 issued a report identifying 15 jurisdictions where the existing measures to combat money laundering were deemed to be inadequate. The 15 locations-which included such high profile offshore financial centres as The Bahamas, the Cayman Islands, Dominica , Israel , Liechtenstein , the Philippines , and Russia- were described as “non-cooperative in the fight against money laundering”. An additional 14 jurisdictions had been investigated. Just days before the report was released, six jurisdictions (Bermuda, the Caymans, Cyprus, Malta, Mauritius, and San Marino) issued letters offering to eliminate by the end of 2005 practices that had made them offshore tax havens.”

In the letter of assurance dated May 24, 2000 sent by the Minister of Finance of Mauritius to the Secretary-General of the OECD submitted apropos the runs as under :

“OECD's Report, “Harmful Tax Competition: an Emerging Global Issue” (the “OECD Report”) said that the Government of Mauritius would elimination of harmful tax by administrative and legislative actions, and would ensure effective exchange of information in tax matters, transparency, and the elimination of any aspects of the regimes for financial and other services that attracted business with no substantial domestic activities in a phased manner by the end of the year 2005. Mauritius assure that it would refrain from introducing any new regime that would constitute a harmful tax practice under the OECD Report.”13.


What Mauritius has done

19. The policy of confidentiality in Switzerland is the product of its policy of neutrality it maintained in course of history reaffirmed by the Treaty of Versailles and the Declaration of London in 1920. The practice of banking secrecy grew to the present form on account of factors, inter alia , the following :

(i) The geo-political reasons which led Switzerland to maintain neutrality were responsible for generating faith of people that their wealth under the Swiss system was safe. To say the obvious, the most important factor ensuring safety is secrecy.

(ii) During the inter World War period it was essential to ensure secrecy in matters of transaction in bank accounts as there was an evident risk of confiscation of the accounts of the Jews by the Nazi.

But whenever any government produced proof of corruption on the part of the investors the Swiss authorities co-operated to promote the cause of justice. But things should be different if at any subsequent point of time it is shown to the competent authorities that any specific amount of wealth in the Swiss banks represented the proceeds of crimes. The story of Bofors illustrates the high water mark of the judicial process in Switzerland.

But other tax havens have a different track-record. The Caribbean tax havens evidence a specialty of the Caribbean economy: low tax and confidentiality14 Known as financial centres they help commission of financial crimes. On account of displeasure of the United States and the actions of the Paris-Financial Action Task Force some drastic actions were taken. To illustrate with reference to the Bahamas : in February 2001 the Bahamian government cancelled licenses of many offshore banks. It band more than 1,00,000 International Business Companies registered in the Bahamas but with anonymous ownership. Nauru, (population : 12,100), a tiny dot above Australia is doted with four hundred offshore banks whose ways invited serious displeasure of the Financial Action Task Force on Money Laundering. A common device is to set up holding companies in the tax haves. In this game players come from different parts of the world. It is said that some Saudi Arabian prince hold in Netherlands Antilles and many others “hold billions of dollars worth U.S real State through Antilles holding companies”15 India too has produced may bad patriots we have heard a lot about Saint Kitts. We could have known much about the ignoble adventures of our bad patriots in may such destination if our Government would have been patriotic enough to consider the interest of the nation supreme. Liechtenstein was held guilty of money laundering and also in concealing millions of dollars for the drug cartel based in Cali, Colm.,

20. In its eagerness to make Mauritius a most inviting tax haven the operative system has been made but opaque. It is in the public domain that several government agencies sort information from the Mauritian Authorities about the entities operating through Mauritius but they didn't get good response. One thing more : as a matter of policy these Mauritian authorities didn't investigate the affairs of such entities, they had, in fact, hardly anything to supply.


A Spacious Plea

21. The tax havens justify what they do on the ground of their sovereign rights to manage their economic affairs within their domestic jurisdictions. This should be clear from what happened at the Malta Conference of the Finance Ministers held in September 2000. The 2001 Britannica Book of the Year m entions;

“At September 19-21 Commonwealth meeting of Finance Ministers in Malta, many small vented anger at attempts by the Organisation for Economic co-operation and Development to impose economic sanctions by July 2001 on 20 Commonwealth countries operating offshore financial centers unless they complied with OECD tax rules. Those countries insisted that as sovereign states they reserved the right to impose their own tax regimes. The ministers also renewed attempts to speed debt repayment, a matter that, owing to Commonwealth pressure led by successive British governments, had begun to pay off; only 10 countries still qualified for relief, however.”

The efforts of the Financial Action Task Force to eliminate harmful tax practice and money laundering are not appreciated by the States obviously because they profit by such sinister practice. The 2002 Britannica Book of the Year records :

“Continuing disputes between commonwealth countries and the Organization for Economic Co-operation and Development (OECD) over tax havens led to a stormy conference in Barbados chaired by Prime Minister Owen Arthur, at which the OECD backed down on a Memorandum of Understanding imposing new tax procedures on small states.”

1 All figures in paragraph 1 & 2 are taken from 2002 Britannica Book of the Year.

2 Encyclopedia Britannica Book of the Year 1983, p. 523

3 1989 Britannica Book of the Year, p. 393

4 1985 Britannica Book of the Year.

5 All figures in paragraph 1 & 2 are taken from 2002 Britannica Book of the Year.

6 1984 Britannica Book of the Year.

7 V.M Dandekar in Indian Economic Problems and Prospects (Ed. by Bimal Jalan) p. 78

8 Swraj Paul's Beyond Boundaries . p. 115

9 The Indian Economy Problems and Prospects Ed. by Bimal Jalan, p. 186

10. .........................

11 Richard Doernberg and Luc Hinnekens, Electronic Commerce and International Taxation (International Fiscal Association) pp-216-217

12 at page 201

13 http://www.oecd.org/daf/fa/harm_tax/advcom_mauritius.htm

14 Carey R. D'avno, Caribbean Tax Havens (1986)

15 http.//www.offshore-manual.com224_3.html

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