Mauritius tax protocol to give Indian taxman more powers to probe offshore entities

Mauritius has ratified a 2024 tax protocol amending the India-Mauritius double taxation avoidance agreement, granting Indian tax officials direct powers to invoke the Principal Purpose Test (PPT) to deny treaty benefits to offshore entities. Under the PPT, tax officers can challenge treaty concessions even if a Mauritius company has operational substance, if the intent of the structure was to avoid tax. This follows the January 2026 Tiger Global Supreme Court ruling and could impact foreign portfolio and direct investors routing investments through Mauritius, including those claiming capital gains exemptions for pre-April 2017 investments and lower dividend tax of 5 percent.