Real Estate Investor Magazine South Africa May/June 2019 | Page 58

MAURITIUS
Blue skies and Sunshine
Mauritius maintains appeal for investment managers focused on Africa
BY MICHAEL DENENGA & NICOLE PAIGE
N
ot just the ultimate holiday stop, Mauritius is also a pre-
ferred jurisdiction for fund managers looking to establish
African-focused funds. A scenic island off the coast of
Africa, Mauritius' main competitive advantage is its proximity to
the jurisdictions that African-focused funds invest in, but it is also
business oriented and regulation friendly, with enviable tax effi-
ciencies. It is known for the high quality of its administrative and
professional service providers and is generally less expensive than
competing fund administration hubs in Europe and the Channel
Islands.
Mauritius’s sunny appeal has recently come under attack for
its low-tax regime and its challenge will be to avoid international
censure whilst still remaining competitive. From our perspective,
Mauritius remains a credible regime with a lot to offer those
looking for a platform from which to invest into Africa.
Some of the most pointed criticism of Mauritius has come
from the United Nations and IMF. According to the United
Nations, the low tax regime and wide-ranging tax treaty network
of Mauritius is responsible for a USD 100 billion loss in revenue
for developing countries.[1] An IMF paper published in 2018
found that African countries are likely to suffer a reduction in
tax revenue when they sign tax treaties with headquarter regimes
such as Mauritius.[2] The IMF paper has, however, been
critiqued for failing to assess the benefits of such tax treaties
to African economies, particularly Mauritius' contribution
to “Foreign Direct Investment” in Sub-Saharan Africa. The
paper's findings were further criticised for relying upon outdated
information and statistics and ignoring efforts by Mauritius to
enhance its legal and regulatory frameworks for exchange of
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MAY/JUNE 2019 SA Real Estate Investor Magazine
information and transparency in terms of international norms
and standards, which it achieved through the incorporation of
a Common Reporting Standard (CRS) platform focusing on
Automatic Exchange of Information by the Mauritius Revenue
Authority in July 2018.[3]
On the positive side, the following findings by international
organisations have reinforced that Mauritius continues to be a
credible jurisdiction:
•
on 21 August 2017, the Global Forum on Transparency
and Exchange of Information for Tax Purposes published
the outcomes of a new and enhanced peer review process
assessing the compliance with international standards
for the exchange of information on request between tax
authorities and rated Mauritius as overall "Compliant";
•
on 16 October 2018, the OECD removed Mauritius
from the list of countries that offer residence and
citizenship through investment schemes that could
potentially be detrimental to the integrity of the CRS;
•
on November 2018, the OECD's Inclusive Framework
on BEPS approved updates to the results of reviews of
preferential tax regimes conducted in connection with
BEPS Action 5. All Mauritius regimes previously
determined to be harmful were cleared; and
•
in December 2018, the Dutch authorities published
an updated list of low-tax jurisdictions flagged by the
Dutch as being harmful in addition to the jurisdictions
already blacklisted by the European Union. Mauritius
did not appear on the list.