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Mauritius is no longer a tax haven, and there is no place for shell companies, said Soomilduth Bholah, Minister of Financial Services and Good Governance, Mauritius, as he strongly pitched Indian investors using island country as a gateway to access the African markets.
A tax haven is a country that offers foreign businesses and individuals minimal or no tax liability for their bank deposits in a politically and economically stable environment. However, in the last four or five years, Mauritius has put in place many stringent regulations to eliminate that image, he told businessline.
“Signing of the Multilateral Instrument; abolition of the deemed foreign tax credit and the Global Business License 2 company and amendments of the Income Tax Act were some of the reasons that helped Mauritius to get rid of the tax haven image,” he added.
“We now want to be the gateway for Indian companies to Africa. Out of the 54 African companies, Mauritius has trade agreements with 34 that will ensure safety of funds invested in Africa,” he said.
India Business Mission
The minister was in Chennai on Monday, undertaking his India Business Mission from March 14 to March 23 covering cities such as Delhi, Chennai, Hyderabad, and Mumbai.
The minister said Mauritius does not have any shell companies and is not a tax haven. If it were a tax haven, it would not be scoring 40/40 in the Financial Action Tax Force.
“We are only one of the four jurisdictions of the world that meet all the requirements on Anti Money Laundering and Counter for Terrorism Financing Measures. For us to meet that, we cannot have shell companies. We need to have transparency and trust. We have a working relationship with SEBI in India and various regulatory bodies in Asia, Africa, and you will find that the Mauritius International Financial Centre (MIFC) is part of all of that,” he said.
The MIFC has on several occasions been reviewed by International bodies like the International Monetary Fund, the World Bank and the OECD and has each time earned good ratings. It has accepted and subscribed to the ongoing assessment program of the IMF/World Bank and has satisfactorily completed two assessments under the Financial Sector Assessment Programme (FSAP).
“So far, the OECD is the only competent authority in international tax matters. In the absence of any other recognized body, we have been adhering to the recommendations and guidelines of the OECD. The OECD is satisfied with our system and in itself proves that Mauritius is not contravening any international regulation,” he said.
Mauritius has taken initiatives to bring about legislative and policy amendments, which have resulted in the abolishment of the Global Business category 2 companies, causing the deemed foreign tax credit regime to be completely removed, he added.
For the fiscal regime, you have one major regulator, the Organisation for Economic Co-operation and Development, which gives four conditions defining tax haven. Mauritius does not demonstrate any of these conditions, he added.
The MIFC is a division of the Economic Development Board Mauritius and is globally recognised, serving as a hub for international banks, legal firms, corporate services, investment funds, and private equity funds, the minister said.
Africa access
The minister urged investors and companies in India to set up their office in Mauritius to operate in Africa rather than setting up directly in Africa. A company can directly invest in an African country. However, there is no guarantee if that country changes the law, and there could be the threat of taking away all the assets and investments. However, routing the investment through Mauritius ensures the safety of the investment due to the trade agreements with various African countries, he said.
Some of the Indian companies lost heavily by investing in Africa directly. However, companies like Huawei started in a small way in Mauritius to access the African market and have grown bigger in the last two years, he said.
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