mauritius was the standard way to invest into india said reuven aviyonah a corporate and international taxation professor at the university of michigan law school it contained no limits on who the ultimate recipient of the income could be as long as the funds flowed through mauritius layering of ownershipas those flows gained momentum so did suspicions that indian entities were routing their money via mauritius a maneuver called round tripping which could be used by companies and individuals to evade tax and launder criminal proceedings according to arun kumar a retired professor who taught at new delhis jawaharlal nehru university money trails and ownership from india were obscured by a process of layering through multiple overseas shell companies he saidthey were using this web to basically prevent investigative agencies from figuring out whos moving what money and make it look as if these were genuine foreign funds and not roundtrip funds said kumar whos authored a book on indias illicit economyeventually mauritius came under global pressure after the paradise papers a trove of documents leaked to the international consortium of investigative journalists in 2017 alleged the country was a secretive financial hub that allowed businesses and wealthy individuals to shield their assets and profits from taxationfor india a succession of financial scandals and frustration at attempts to make foreign corporates pay more tax led to the two countries in 2016 reworking their treaty it closed a popular loophole so india could tax shortterm capital gains though zero levies remain on investments held for over a year little impactindia also tightened rules on socalled participatory notes which were used to anonymously invest in indian stocks and derivatives forcing issuers to verify client identitymauritius reworked some of its tax laws and treaties supporting in october 2021 a global agreement that introduced a minimum corporate tax rate as well as greater disclosure for businesses with annual revenue above 750 million euros 791 millionthose measures did see the financial action task force a global watchdog remove mauritius in 2021 from its gray monitoring list within months the eu moved to take it off its blacklist the steps also meant the waning of mauritiuss position as indias biggest source of foreign direct investment after peaking at 159 billion in the year through march 2018 the flows have dropped sharply to 94 billion according to reserve bank of india data relegating the country below singapore and the us the mauritius route is less appealing now because of both the changes in the law and in the tax treaty said aviyonaheven so mauritius remains a popular offshore base for many investors seeking opportunities in some of the biggest marketsthe furor over adani isnt forcing a reckoning on the islands sandy shores lovania pertab the chairperson of the local chapter of transparency international the anticorruption group said nobody wants to wreck its lucrative offshore financial industry but setting up 38 companies in mauritius as hindenburg alleges adani did in their report looks very abnormal she