India's new Mauritius treaty signals end of shopping for tax havens
* Investors relieved tax rules only affect future investments
* Analysts say may not make sense to look for other tax havens
* India likely to expand crackdown on tax treaties
By Rafael Nam and Abhirup Roy
MUMBAI, May 11 (Reuters) - India's move to plug suspected losses in tax revenue through Mauritius, a top source of foreign investments into the country, has not sent financial markets into a tailspin as it would have just a few years ago.
But while markets took the move in their stride, analysts warn India is likely to expand its crackdown on tax treaties and make it harder for investors to shop around for new havens.
India will start imposing capital gains tax on investments coming from Mauritius starting next year, after the two countries agreed to amend a three-decade old treaty.
Now, funds from Mauritius interested in India will have to weigh paying capital gains taxes that could range from zero to as much as 20 percent versus the expense of setting up a new structure.
Investors say they will wait for final details and consider how it will affect India's tax treaty with Singapore. The rules state any changes to the capital gains exemption provided to Mauritius will lead to changes in the agreement with the city-state. Continuación...