The role of headquarters in multinational profit shifting strategies

The objective of this paper is to the study the impact of the amendment of India Mauritius DTAA on foreign investment in India. It provides adetailed analysis of how Mauritius, a small island country became the most favourite route for foreign investor in India during the period 2000 to 2017. The paper identifies the reasons for emergence of Mauritius as the foremost exporter of foreign capital to India and in this context examines the role of the Agreement on Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes of Income and Capital Gains between India and Mauritius (DTAC). In 2016, DTAC was amended and with the implementation of General Anti Avoidance Rule (GARR) from 2017 by India and changes in international taxation zeitgeist due to OECD project on Base Erosion Profit Shifting (BEPS) the Mauritius route faced new challenges. The paper studies the influence of these changes on FPI and FDI investments flow from Mauritius to India.It finds that advantage of Mauritius in FDI and FPI flow has come down in 2018-19 and its share in foreign investment is likely to come down further with the amendment of the DTAC taking full effect from April 2019. However,amendment has given Mauritius a competitive advantage in channelizing debt investment to India as compared to its competitors like Singapore and the Netherlands and in future we may see higher debt investment from Mauritius.

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THE CONTEMPORARY INTERNATIONAL TAX SYSTEM, DEVELOPING COUNTRIES, BEPS AND OTHER CURRENT ISSUES / O SISTEMA TRIBUTÁRIO INTERNACIONAL CONTEMPORÂNEO, PAÍSES EM DESENVOLVIMENTO, BEPS E OUTRAS QUESTÕES ATUAIS

Revista de Finanças Públicas Tributação e Desenvolvimento ◽

10.12957/rfptd.2018.38279 ◽

2018 ◽

Vol 6 (7) ◽

Author(s):

Marcos Aurelio Pereira Valadão

Keyword(s):

Developing Countries ◽

International Organizations ◽

The South ◽

Profit Shifting ◽

Tax System ◽

Tax Systems ◽

International Tax ◽

Rich Countries

This paper analyzes the Contemporary International Tax System with focus on international tax cooperation, the participants of this context, that goes beyond the countries, and the issues that are present in base erosion and profit shifting (BEPS) Project with the focus on those that are the most important for developing countries, also taking into consideration the Brazilian approach to those issues. It also verifies the role of international organizations (including NGOs), The paper consider other aspects, for example, the south Centre initiative on tax cooperation, and the biased approach from the northern rich countries towards the south poorer economies, coming to the conclusion that the differences between the needs of of developed and developing countries, which affect their tax systems, and the different tax systems itself, must be taken into account.

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