The Impact of the Recent Amendment on Mauritius and Foreign Investors

A new amendment to the India-Mauritius tax agreement now requires Mauritian entities to pass a principal purpose test to prove genuine operational intentions, potentially leading to taxation on past transactions. This move aligns with international tax standards advocated by the OECD and aims to prevent tax abuse through shell companies. The tightening of tax regulations in Mauritius is driven by global scrutiny for money laundering and terrorism financing, prompting the country to overhaul its tax laws and move away from its tax-haven image, potentially impacting foreign investors and the future of financial operations in Mauritius.