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Vimal Damry

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Mauritius is strategically located in the Indian Ocean and is commonly referred as the gateway for investments in Africa.  Mauritius is also well known for its treaty-based tax planning jurisdiction and as an international financial centre of repute and substance.  Unfortunately, Mauritius is sometimes very wrongly referred to as a “tax haven” jurisdiction despite the fact that many internationally recognised institutions do not characterise Mauritius as being a tax haven.  Mauritius is on the white list of the OECD.

Actually, there is no single and agreed definition of “tax haven”.  The best known definition is the one from the OECD which uses four (4) key indicators to declare a jurisdiction as a tax havennamely lack of transparency, unwillingness to exchange information with the tax administration of other countries, absence of a requirement for economic substance, and nil or only nominal taxes.  However, Mauritius does not meet any of these indicators as discussed below and has been categorised as largely compliant.

1) Transparency
Mauritius has introduced state-of-art legislations that are recognised as transparent by the OECD.  These legislations include strong legal and administrative provisions to ensure that global businesses are conducted in a well regulated environment.  The OECD has even concluded that Mauritius has strict legislations to fight money laundering and combat the financing of terrorist activities.

2) Willingness to exchange information with other countries
Mauritius is a treaty based jurisdiction and has concluded tax treaty agreements with many countries and all these agreements include provisions for an effective exchange of information.  

The Mauritius Financial Services Commission has signed various Memorandum of Understanding with several regulatory bodies in other jurisdictions to effectively exchange information.

Since Mauritius is on the OECD / G20 white list of countries, it has been subject to peer review under the Global Forum on Transparency and Exchange of Information for Tax purposes to implement robust standards on exchange of information.  Mauritius has, so far, been found to be largely compliant.

Mauritius has always shown its ongoing commitmentfor exchange of information.  For instance, with India, Mauritius has agreed to the posting of an Indian tax officer at the Indian High Commissioner in Mauritius to facilitate the exchange of information.With the USA, Mauritius has signed an intergovernmental agreement to implement FATCA.

3) Economic substance
Economic substance is a key feature of the Mauritius international financial centre and this is embedded in the Mauritian legislations/regulations.

Global Business Category 1 (GBC1) companies must adhere to a set of substance requirementsto obtain a Tax Residency Certificate (TRC) that allows them to benefit from the various tax treaties.  Theserequirements include:
a) The principle bank accounts must be kept in Mauritius; 
b) The accounting records must be kept and audited in Mauritius; 
c) The Company must have at least 2 directors resident in Mauritius;
d) The Board meeting must be held and chaired in Mauritius; and
e) The Company must meet any one of the following conditions:
i. Having office premises in Mauritius; 
ii. Employment of at least one local staff on a full-time basis at an administrative/technical level;
iii. Choosing Mauritius as the seat for arbitration of disputes;
iv. Holding assets in Mauritius;
v. Listing on a Mauritius Stock Exchange; 
vi. Incurring reasonable expenditures in Mauritius.

4) Low Taxes
Mauritius has a tax rate of 15% and it grants a deemed foreign tax credit of 80% to GBC1 companies which makes the effective tax rate at 3%.  

In light of the above, Mauritius cannot be labelled as a tax haven jurisdiction. Mauritius has a simple and low tax system, transparent and predictable jurisdiction with a diversified and dynamic economy of substance.  Mauritius is very cooperative and fully understand the importance of tax information exchange. 
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The Seychelles archipelago of 90,000 people has recently been accepted into an exclusive club of 83 nations on the World Bank’s high income list.
Seychelles welcomed this recognition from the international institution which is mainly due to the hard work, resilience and innovation of the Seychellois people and Seychelles is committed to continue on this path.  Actually, there has been a number of other factors contributing to this success which include the economic reform programme undertaken since 2008, the diversification of the economy and the growth of investment in tourism.
However, the Seychelles government points out that assessing a country’s wealth by GDP per capita alone may not always be correct particularly when it comes to Small Island Developing States (SIDS) which remain vulnerable to external shocks.  Therefore, Seychelles is requesting for more targeted support from the international community to allow SIDS to adapt and build resilience against both climate change and economic shocks.
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Mauritius and Zambia have signed an Investment Promotion and Protection Agreement (IPPA) to further reinforce and deepen economic cooperation between the two countries.  The Mauritian government has proposed the setting up of a Joint Economic Commission between the two countries to speed up the bilateral trade & investment exchanges and sharing of know-how in textile, tourism and agriculture.

Mauritius would like to explore new opportunities and play an important role in the African growth story.  Actually, the IPPA with Zambia is the 21st agreement that Mauritius has signed with an African country.  

A Double Taxation Avoidance Agreement (DTAA) between Mauritius and Zambia has been in force since June 2012.
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The Foreign Account Tax Compliance Act (FATCA) is a US domestic law with global impact.  It was enacted to target non-compliance by US taxpayers using foreign accounts.  It compels certain foreign entities to disclose information on US taxpayers with more than USD50,000 in an account.

Many countries have entered into bilateral agreements with the US including Mauritius.  The Model 1 Intergovernmental Agreement (IGA) which Mauritius has entered with the United States into requires financial institutions in Mauritius and registered under the FATCA regime to report information to the Mauritius Revenue Authority (MRA), which then exchanges the information with the US authorities.  The reporting guidance was issued on 20 April 2015 under the IGA for the purpose of implementing the FATCA regime.

Consequently, the Mauritian financial institutions must report information for the year 2014 to the Mauritius Revenue Authority (MRA) and the deadline for submission of such information has been extended to 31 August 2015.

Though FATCA can cause possible adverse effects such as a decline in the volume of future investments from US persons or simply some financial institutions may wish to limit their exposure to US client based due to associated risks and complexities of compliance, FATCA is viewed as another mean to show Mauritius’s commitment in sharing information and become more transparent.
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The Mauritius Financial Services Commission intends to introduce a new category of investment adviser licence namely the Investment Adviser (Corporate Finance).  The objective is to enlarge the scope of investment advisory services and to promote the development of Capital Markets in Mauritius.

Currently, there exist 2 categories of Investment adviser licence – restricted and unrestricted.  The holder of an unrestricted licence is authorised to manage portfolios of securities and give advice on securities transactions while the holder of a restricted licence is only authorised to give advice on securities transactions.

The holder of the new category of Corporate Finance shall be authorised to give advice on corporate matters concerning securities transactions.  Corporate Finance is defined as the provision of advisory services on (i) compliance on the listing requirements of any securities exchange; (ii) raising of funds through the issue of securities; and (iii) arrangement/restructuring including takeovers, mergers and acquisitions of a corporation as far as it relates to securities transactions.

The processing fees for this category of licence is proposed to be MUR10,000 and fixed annual fee shall be MUR100,000.
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One of the benefits of a Mauritius trust is Confidentiality.  There is no register of trusts nor is there any need for disclosure of beneficial owner to any authority.  Trustees are not required to disclose any confidential information to any person not legally entitled to it.  Nor are they required to produce or divulge any confidential information to any court, tribunal, committee of enquiry, or other authority in Mauritius or elsewhere except where ordered by court in accordance with the Law. 

However, the UK CDOT/ UK FATCA requires financial institutions (including trusts) in Jersey, Guernsey and the Isle of Man (the Crown Dependencies) and the Overseas Territories of Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos Islands (the Overseas Territories) to automatically provide information relating to the financial affairs of their UK resident clients in respect to 2014 onwards.  It includes, by election, an alternative reporting regime (ARR) for the UK resident non-domiciled persons (RNDs).  The ARR is a limited form of reporting compared to full reporting and the financial information to be reported is restricted to amounts that may have UK tax implications.  All the CDOTs have entered into an automatic exchange information agreement (Intergovernmental Agreements – IGAs) with the UK.  Under these agreements, the financial institutions have an obligation to identify accounts beneficially owned by “UK Persons”.   Information in respect of those accounts and the beneficial owners of those accounts will be reported on an annual basis by the financial institutions to their local tax authorities for onward sharing with the UK HMRC.  Information that are shared include (i) Account Holders’ name, address, dates of birth and NI numbers; (ii) Payment to and from the account, from and to a UK (or unidentifiable) destination.  If reportable payments have been made, the account number and the name of the reporting financial institution have to be reported.  With regards to a trust, the trustee is required to report gross payment and movement of assets from a UK source or from an undeterminable jurisdiction to a UK account.  

Mauritius may therefore be considered by RNDs for their tax planning.
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Mrs Ameenah Firdaus Gurib-Fakim is the first lady to become the President of Mauritius.  This distinguished role is one amongst other of her great achievements in her brilliant career as biologist and scientist and being the first Mauritian to engage in medicinal plant research.  Mrs Gurib-Fakim is now serving as a pioneer in the political sphere of Mauritius. 
Mrs Gurib-Fakim believes that the office of the President should be called upon to act as a “Think Tank” and it should engage in issues that are relevant to the economy and the country at large.  She mentioned that a lot can be achieved if we put our minds behind solving critical economic issues.
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The United Kingdom Trade and Investment Department (UKTI) opened an office in Mauritius on 27 January 2015.  Its objective is to identify opportunities for UK companies to invest in Mauritius and it will also advise local companies on the potential investment avenues in the UK.  

The Mauritius office shall assist in increasing the bilateral trade between the two countries and ensure that Mauritius gains from high quality British services/goods, partnering with right British businesses.  Mauritian companies which invest in countries around the world can also explore the various opportunities for investments in UK since UK is one of the fastest OECD economies in the world and they can obtain excellent return on their investments.

UKTI’s presence in Mauritius is considered to be a win-win situation to both countries.
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Mauritius is well positioned to facilitate investment flows from China into Africa and vice-versa.  Consequently, China is investing massively in the growth of the island economy.  Recently, China has allocated a grant of approximately USD13million for supporting development projects in priority areas in Mauritius.   This facility is viewed as enhancing and enriching the economic cooperation between the two countries in terms of transfer of capital, technology and business opportunities.

China shall continue to improve this cooperation by giving its support in the Mauritius’s textile sector, tourism sector and other promising sectors.
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