A Tax Information Exchange Agreement (TIEA) and an intergovernmental agreement to implement the Foreign Account Tax Compliance Act (FATCA) have been signed today 27th of December 2013 by Finance Minister Xavier Duval and US Ambassador, Shari Villarosa. This aims to ensure clarity between the two countries on tax matters as well as help to eradicate tax evasion globally and provide mutual assistance in tax matters and improve international tax compliance. The today signed TIEA guarantees exchange of information between competent authorities through specific request, automatically or spontaneously.
The FATCA agreement between the United States and Mauritius states that financial institutions of the island will give information about US account holders to the Mauritian government which in turn will pass that information to the American Internal Revenue Service (IRS). Moreover Mauritius Revenue Authority will also receive information about local account holders in the United States by the IRS.
“The signing of these agreements is an important step forward in the collaboration between the United States and Mauritius to combat tax evasion. When taxpayers overseas avoid paying what they owe, other taxpayers have to bear a disproportionate share of the tax burden. The TIEA and the FATCA intergovernmental agreement are important parts of the US government’s effort to address that issue,” said Shari Villarosa.
Till now 19 FATCA intergovernmental agreements have been signed by the US. This law was enacted in 2010 to deal with the problem of offshore tax evasion through transparency and information on accounts held by US taxpayers in other countries.
FATCA demands the provision to the US Internal Revenue Service (IRS) with account information about US account holders. Failing which, 30% withholding tax is imposed on certain US source payments, such as interest.