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We will never allow crooks to do business here: Mauritius
Port Louis, May 21:
Warning tax 'crooks' of stern action if they try to operate from its soil, Mauritius has promised full support to India in bringing to book any entity trying to indulge in money laundering or round tripping through this island nation.
Terming the perception of Mauritius being used by Indian entities for money laundering and other tax evasion activities as based on "misconception and misinformation", the country's Vice Prime Minister Xavier Luc Duval also said that some people might be using the island nation as a 'political football' to meet their own goals.
"You can rest assured, we will never allow crooks to do business in this country, and if they try, they will face the toughest punishment," said Duval, who is also the Finance and Economic Development Minister.
"We always aim for quality (in whatever we do). Our island's reputation is very important to our citizens. Our country is known and respected worldwide as a jurisdiction of the highest quality and integrity," he said.
The Minister said Mauritius has taken numerous steps over the years to ensure compliance with global norms and standards in the financial services business and it has always been a collaborative and transparent jurisdiction.
"Mauritius has always been committed to fully collaborate with other Governments, authorities to ensure effective and timely exchange of information. Obviously, at the beginning we were on a learning curve, but since then we have gained huge experience," he said.
Mauritius used by tax evaders
Mauritius accounts for a major chunk of foreign investments coming into India, as many investors from the US, Europe and other places tend to route their capital flows into India through this Indian Ocean country to benefit from a favourable tax treaty and the ease of doing business here.
However, concerns have been raised in recent years that Mauritius is also being used by the tax evaders to launder their illicit funds to and from India.
There have also been allegations that Mauritius is home to a large number of shell companies that have been set up here to benefit from the favourable taxation regime and treaties and they do not have any substantial business in the country.
"Obviously as we progress as a jurisdiction, we are continually enlarging the type of services offered and the number of service providers that are here.
"We are introducing in our legislation enhanced commercial substance requirements for the global business companies operating from Mauritius," he added.
Duval said that Mauritius' greatest asset has been its human resources and it was because of this asset that the country has reached a higher middle income status, despite having very little by way of natural resources.
"So, it has been very disappointing to see some unfortunate reports attacking our reputation in India. Our country has very strong friendship with India. I believe this (the allegations) is based on misconception and misinformation, with some people using Mauritius as a political football," he said.
While the Minister did not specify further on how Mauritius was being victimised, there have been talks that India-focused investors might shift to other jurisdictions like Singapore in the wake of concerns like round tripping raised about this African country, which has a significant chunk of Indian origin people as its citizens.
Mauritius-India cooperation
Warning of strict action against any illicit business from the country, Duval said, " Our laws are very stringent including our anti-money laundering legislation. This clearly shows our proactiveness to prevent any kind of illicit transactions from being structured in the country.
"Furthermore Mauritius has always been collaborative and cooperative. We have an excellent track record of cooperation with governments worldwide to prevent and identify any illicit activity.
"We regularly share information with the Indian authorities and some of the scams that have been uncovered in India have been as a result of information collected in Mauritius," he said.
Asked about the information sought by India on cases concerning the 2G scam and chopper deal, among others, Duval said, "We have been glad to collaborate and have given all information available here. In fact we exchange information and we don't look for excuses.
"We fully support India in its legitimate efforts to fight Money Laundering and round tripping," he said.
In reply to a question on what Mauritius' reply is when the queries appear to it as vague and like 'fishing expeditions', Duval said, "I can tell you that if it is legally possible to provide the information, we do it. I believe all requests for information that are legally in order have been answered and none are outstanding."
"The message that I want to give to any person thinking to engage in anything illegal in or from Mauritius is that they would be very ill advised to do so," he added.
On the pending tax treaties with India, Duval said that both sides have agreed on a new Tax Information Exchange Agreement (TIEA) and it is now waiting to be signed.
On the Double Taxation Avoidance Agreement (DTAA), he said the treaty has been mutually beneficial for the two countries for the past three decades and is hopeful that an agreement would be reached soon on a revised DTAA and would address all the concerns India might have
Cabinet may okay I-T dept revamp plan tomorrow
New Delhi, May 22:
The Union Cabinet is likely to approve the restructuring of the Income-Tax Department at its meeting scheduled tomorrow. The plan entails recruitment of around 19,000 tax officials across the country in the next two years.
"The proposal to restructure the Income-Tax Department would be placed before the Union Cabinet at its meeting tomorrow for consideration and approval," a source said.
He further said that the proposal includes recruitment of 19,000 tax officials across the country in a span of two years.
According to the information available, the Income-Tax Department restructuring has been approved by a Group of Ministers comprising Finance Minister P. Chidambaram, Home Minister Sushilkumar Shinde, Environment and Forests Minister, Jayanthi Natarajan, and the Minister of Personnel, V. Narayanasamy.
The ministerial panel had reportedly also decided to extend the rank and pay of special secretaries to chief commissioners of bigger I-T zones and to heads of various directorates under the Central Board of Direct Taxes.
Under the plan, around 800 officials would be recruited through the Indian Revenue Service (Group A) route and around 18,000 as Group B and Group C officials.
The GoM was of the view that the revamp plan would result in quicker tax refunds and detection of high net worth individuals who escape the tax net.
The Government plans to collect over Rs 6.68 lakh crore from direct taxes in the current fiscal, up from Rs 5.65 lakh crore in the previous fiscal.
Chidambaram to get cracking on financial sector reforms
Business Line Finance Minister P. Chidambaram, along with ICSI President S. N. Ananthasubramanian and NSE Managing Director and CEO Chitra Ramakrishna, at a seminar on 'Indian Financial Code' in New Delhi on Wednesday. — Ramesh Sharma
Says many of reforms panel report can be implemented right away
New Delhi, May 22:
Passing laws may have become difficult, but the Government is committed to putting in place a new financial regulatory system that will serve the nation well for at least the next 50 years, said Finance Minister P. Chidambaram.
A complete revamp of the financial sector laws in the current political milieu may be tough, but there are several elements of the Financial Sector Legislative Reforms Commission (FSLRC) report that can be operationalised at the earliest, he said.
Detailed consultations before issue of any new regulation and conducting basic cost-benefit analysis are recommendations that can be implemented right away, Chidambaram said, addressing the third national seminar on 'India Financial Code' organised by the Institute of Company Secretaries of India (ICSI)..
SRIKRISHNA PANEL
Budget 2010-11 had proposed the setting up of FSLRC to revamp the financial sector laws so as to bring them in line with the requirements and expectations of the sector. Justice (Retd) B. N. Srikrishna was asked to head the FSLRC, comprising ten experts from the fields of law, economics, finance, regulation and markets.
The panel, which was set up in March 2011, submitted its report to the Finance Minister in March this year. Stating that it was not easy to pass laws in India, Chidambaram pointed out this has become even more complex with coalitions and "legitimisation of obstruction as a parliamentary tactic".
He highlighted the case of the Companies Bill, which even after passage by the Lok Sabha is hanging fire with the Rajya Sabha yet to approve it.
PROJECT PLAN APPROACH
Careful analysis of every sentence of existing laws and every section of the proposed Indian Financial Code is necessary before any large scale repeal of existing laws can be agreed upon, Chidambaram added.
srivats.kr@thehindu.co.in
Selection of new CAG 'illegal', says Prashant Bhushan
Asks whether new CAG will audit defence deals cleared by himself as Def Secy
New Delhi, May 21:
The reported selection of Defence Secretary, Shashi Kant Sharma, who is tipped to take over as the new Comptroller and Auditor General (CAG) after Vinod Rai retires today, is "illegal and unconstitutional", senior lawyer and Aam Aadmi Party leader, Prashant Bhushan, said here on Tuesday.
At a press conference, Bhushan alleged 'conflict of interest' as Sharma was the Director General-Acquistions in Defence Ministry during 2003-10, when defence deals such as Agusta Westalnd helicopters, Scorpene etc took place, which were under probe.
"Will he conduct a fair audit of the purchases cleared during his tenure?" Bhushan said, adding that "such a long period for a bureaucrat in the same Ministry is unusual."
He said his party would "seriously consider" challenging Sharma's selection in court, saying that it 'compromised' the principle of 'institutional integrity' laid down by the Supreme Court. In 2011, the apex court had struck down the appointment of P.J Thomas as Chief Vigilance Commissioner as there was a pending chargesheet against him in the palmolein import scam.
While appreciating the "fearless' role played by many bureaucrats such as Rai, Bhushan flayed the lack of transparency in the selection of watchdogs, such as CAG, which were handling crucial audit cases such as the KG-D6 basin case, involving the Mukesh Ambani-led Relaince Industries.
He distributed the Department of Economic Affairs' reply to an RTI, in which it admitted to that there was no formal system for appointment/selection of CAG, which was done only in terms of 'past conventions and practices'.
Also, no selection committee or collegium is constituted for the purpose and the decision is based on a note moved by the Finance Ministry, after which a recommendation is made to the President of India.
Bhushan also flayed key Opposition parties, such as BJP, and the mainstream media for being 'silent' on such as crucial issue involving public finances.
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