The Double Irish and Dutch Sandwich strategies and tax avoidance in Mauritius
| DOI | https://doi.org/10.1108/JMLC-09-2020-0103 |
| Published date | 02 November 2020 |
| Date | 02 November 2020 |
| Pages | 737-751 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Ambareen Beebeejaun |
The Double Irish and Dutch
Sandwich strategies and tax
avoidance in Mauritius
Ambareen Beebeejaun
University of Mauritius, Reduit, Mauritius
Abstract
Purpose –The purpose of thispaper is to analyze the Double Irish and Dutch Sandwich (DIDS) tax schemes
used by international companies.Companies using these schemes are enabled to transfer a large amount of
their profits to offshore tax havens by using wholly owned subsidiaries located in Ireland and the
Netherlands. This paper also analyzes the US General Anti-Avoidance Rule (GAAR) to see whether it can
effectively detect and counteract this scheme. This analysis is furthermore enhanced by applying the
MauritianGAAR through Section 90 of the Income Tax Act to the said schemes.
Design/methodology/approach –Concerning researchmethods, the library and the internet will be the
main sources of information to be used for this paper.Through the usage of library research, the Mauritian
Income Tax Act, US GAAR, European Commissiondecisions and scholar writings will further enhance this
paper on the structureand preventive actions that can be taken against the DIDS scheme. This paperwill also
use a case studycoupled with a theoretical analysis ofcurrent anti-avoidance rules.
Findings –The paper then concludesthat it is possible to counteract the schemes using theMauritian law
but under specific circumstances. It is then revealed that there is a fundamental flaw in the current tax
systems, which is the inability to regulate the intangible nature of resources and technology-based
transactions.
Originality/value –To the author’s knowledge, this paperis among the first literature on the subject of
DIDS strategiesconducted in the context of Mauritius.
Keywords Double Irish schemes, Dutch sandwich strategies, Mauritius and tax avoidance,
US GAAR and Mauritius GAAR, Double dutch sandwich scheme, Tax avoidance in Mauritius
Paper type Research paper
Introduction
By the end of the 20th century and in the beginning of the 21st,ways of doing business have
evolved. The escalation of international companies enabled trading on a global level.
Companies now set up subsidiariesand branches all over the world to facilitate transactions
and sales. However, developments in technology have a double effect here. First, the
upsurge of the web made wayto agreements and transactions that could be effectedswiftly.
Second, with all of these new technologiesbeing invented, a wealth of intangible intellectual
property assets was introduced, which in previous generations did not make a significant
involvement to the economy. Our laws were not designed to account for the immense
amount of intellectual property in the world and the technological developments achieved.
Income tax law is one among other legislations that did not account for such growth. The
income tax system was made up in a time whentrade was easier to keep track of and, hence,
could be assessed effortlessly. Usuallytrade done at that time was with tangible goods and
the type of transactionsthat took place meant that income tax regulation was upfront.
Contrasting with today’s time, a huge expanse of goods and services makes use of
immaterial intellectual properties. The large quantity of tech innovations that were made
Double Irish
and Dutch
Sandwich
strategies
737
Journalof Money Laundering
Control
Vol.24 No. 4, 2021
pp. 737-751
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2020-0103
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