Right now, the World Bank and the IMF are much more skeptical because they have seen the evidence. The OECD is now promoting a set of international agreements and initiatives, only one of which is the tax treaty. It is a little different between developed countries. In this case, because investment flows are much more complex, the double taxation margin is greater. So I think there is evidence that contracts work. But for an African country, there is no evidence. The DBA between Zambia and Mauritius obliges the contracting parties to terminate the whistleblowing until 30 June of the calendar year, as long as the contract has been in force for at least five years. Once the notice is issued, the contract will no longer apply to Zambia on the last day of the calendar year and to Mauritius on July 1 of the following calendar year. Tax evasion, on the other hand, exploits the way the law is drafted. For example, a tax treaty can be used to obtain an advantage that was not the original intent of the treaty. The tax authority is not in a position to do anything about this in the immediate time frame, as the taxpayer is legally authorized. In the longer term, you need to change the law.
You have to change the tax treaty, which is difficult to do because you need both parties to approve it. However, this initial reason for wanting to avoid double taxation has not completely disappeared, as there will always be some differences in the way countries manage profits. Unusual for a low-tax country, Mauritius has a considerable number of double taxation agreements. In general, contractual benefits are available to all Mauritanian companies, with the exception of „internationals“. All contracts in Mauritius are based on the OECD standard contract and contain the exchange of information clauses. However, the exchanges are limited to issues relating to the functioning of the treaties themselves. The contract with India, which had confirmed the emergence of Mauritius as a dominant channel for foreign direct investment in India, was attacked in 2002 by the Indian tax authorities for alleged abuse by Indian investors. In October 2006, the Mauritian government announced that it would strengthen the rules on the issuance of tax certificates; in the future, it would only exhibit them for one year at a time.
On that date, several other restrictions were imposed, including on the issue of Category 1 global business licence applications. Finally, a protocol for the Indo-Mauritian tax treaty was established in May 2016. As of April 1, 2017, the start date of the 2017-18 fiscal year, capital gains from shares of companies established in India were no longer exempt. However, until 31 March 2019, capital gains tax is levied at 50% of the Indian national rate. I do not call them double taxation conventions. I call them tax agreements. Indeed, helping companies avoid double taxation is not really the point they do. The main thing they do is adopt a set of standards for the taxation of companies developed by rich OECD countries and turn it into a hard and enforceable right.
This does not seem to work very well for African countries. The DBAA with Indonesia was cancelled on 1 January 2005 for similar reasons, following the Indonesian government`s announcement of his resignation in 2004 and the refusal to discuss the issue. Currently, there are no negotiations between Mauritius and Indonesia. In August 2009, India said it would review its double taxation agreements, particularly those concluded before 2004. Its aim is to renegotiate the anti-abuse provisions.