Tax & jurisdiction | new legislation should breathe life into Mauritius global business
The Mauritius financial centre is set to expand with a raft of new legislation covering the fund and life industry.
A further boost is expected in global business activities following the Indian Supreme Court judgement ruling in favour of the Indo-Mauritius Double Tax Treaty. And although the stock exchange has been suffering from liquidity problems, plans are underway to create a regional exchange with the South African market.
Collective Investment Schemes legislation is currently being proposed to provide better regulation for investment business. The proposed regulation will provide a framework for the different types of schemes. This includes authorised schemes for retail funds; permitted schemes for offshore funds; professional schemes targeting professional and high net worth investors; and recognised schemes for foreign-registered funds seeking to market their products locally.
Honourable KC Khushiram, minister of economic development, financial services and corporate affairs of Mauritius, said: "We are laying the foundations for the development of new business in the investment industry, in the area of trust administration, investment funds and business outsourcing in financial services."
While investment funds are still in their early stages of development, Khushiram hopes Mauritius will become a major trust administration location worldwide. Presently, the country has expertise in the administration of funds. Mauritius is experienced in NAV calculations and has been developing front and back office systems.
In addition, the Insurance Act is also set to be completely overhauled to strengthen the insurance sector and better protect policyholders. Drafts have been circulated to separate licences for life groups and non-life groups.
Furthermore, a boost is expected in global business activities following the Indian Supreme Court judgment that ruled in favour of the Indo-Mauritius Double Tax Treaty. The decision overturns a previous ruling by The Delhi High court in May last year which quashed a circular of the Central Board of Direct Taxes, on the grounds that it gave unnecessary tax holidays to foreign institutional investors.
Under the double taxation treaty, companies can benefit from zero capital gains taxation and lower dividends taxation.
Khushiram said: "This has dispelled all uncertainties that existed following the Delhi High Court judgement of May 2002 that last questioned the eligibility of double taxation treaty benefits."
There have been moves for investment firms such as HSBC to transfer operations to India. Khushiram hopes Mauritius will capture a significant proportion of that business as he claims it has a fully-fledged infrastructure. Companies are considering outsourcing to India and Khushiram thinks Mauritius can fit in very well with these plans.
One area that has made limited progress is the number of domestic listings and lack of liquidity on the stock exchange. New securities legislation is being prepared to address the factors contributing to the lack of dynamism in the stock exchange. Mauritius is also looking at creating a regional exchange with the South African market.
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