Mauritius : FSC Communiqué - Submission of GBC 2 details

As per Circular Letter CL03022010, Management Companies are required to submit necessary details by the 30th June 2010 with respect to existing companies holding Category 2 Global Business Licences. The Financial Services Commission is on an exceptional basis extending the deadline to the 31st August 2010 for the said submissions.

FSA and FRC look to enhance auditors' contribution to prudential regulation

The Financial Services Authority (FSA) and the Financial Reporting Council (FRC) have today issued a discussion paper which considers ways of enhancing auditors' contribution to regulation.

High quality corporate reporting, audit and assurance support effective governance and underpin market confidence and market discipline. Together with effective communication between the FSA, regulated firms and their auditors, they are critical to achieving the FSA's objectives relating to market confidence, financial stability and consumer protection. They are also central to the FRC's complementary objectives in promoting high quality corporate governance and reporting to foster investment.

The purpose of the paper is to stimulate debate on the role of auditors following the financial crisis. The paper, therefore, explores how the FSA, the FRC and auditors can work together more effectively to enhance auditors' contribution to prudential regulation.

The paper:

• Questions aspects of the quality of audit work relevant to prudential regulation - in particular, whether the auditor has always been sufficiently sceptical and has paid sufficient attention to indicators of management bias when examining key areas of financial accounting and disclosure which depend critically on management judgement;
• Outlines the FSA's concerns about auditors' work on client assets and how auditors fulfil their legal obligation to report to the FSA;
• Explores a variety of ways in which changes are being made and further changes could be made by the FSA, the FRC and auditors to increase the effectiveness with which auditors undertake their work; and
• Examines the regulatory environment in which auditors operate more widely and suggests measures to enhance how auditors contribute to prudential supervision.

Paul Sharma, FSA director of prudential policy, said:

"Our experience has indicated that, at times, auditors have focused too much on gathering and accepting evidence to support firms' assertions rather than exercising sufficient professional scepticism in their approach - this falls far short of what the FSA - and society at large - expects from auditors.

"We have learnt the lessons of the financial crisis and continue to enhance all aspects of our approach to prudential regulation of firms. It is time for the auditing profession to demonstrate that they have also learnt from the crisis. This paper is an important step in the debate that needs to be had around the role of auditors."

Stephen Haddrill, chief executive of the FRC, said:

"Raising the bar for auditors on the application of professional scepticism has been high on our agenda for some time. Investors have a right to expect a more robust approach from auditors in challenging management's judgements and related disclosures. The auditor's ability to carry through their challenge is also important and proposals in this paper for improved engagement and information sharing between auditors and the FSA will facilitate appropriate improvements.

"We see significant improvements in disclosures about credit exposures, risks and uncertainties provided by banks in their most recent financial statements. Much of this follows from guidance issued by various bodies in the regulatory community. These improvements should have been achieved earlier and with less intervention. This is a key lesson we believe auditors can help firms respond to as disclosures required in relation to critical risks and judgements evolve."

The deadline for responses to the discussion paper is 29 September 2010.

Isle of Man : The Alternative Investment Managers Directive

On 18th May 2010 the Council of the European Union agreed for negotiations to begin with the European Parliament on the draft Alternative Investment Fund Managers Directive ("the Directive"). If adopted by the EU Parliament this will increase the regulatory requirements for fund managers, including those based outside the EU, for any Alternative Investment Funds ("AIFs") (such as hedge funds and private equity) marketed or operated in the EU.

If the draft Directive is approved by the EU Parliament in July much of the detail for the proposals will remain a work in progress and the Commission will maintain a close watching brief on the situation as it develops.

The EU’s stated aim is to create harmonised regulatory standards for all alternative investment fund managers within its scope and to enhance transparency of the industry and reduce risks to financial stability.

Proposals which will be of primary interest to the Island’s funds industry are those relating to non-EU Managers of AIFs which will be marketed into the EU.

The Directive proposes that individual member states may allow managers in non-EU states to market AIFs to professional investors in their jurisdiction providing there are rules in the home jurisdiction which are at least equivalent to the Directive in relation to:

• Transparency Requirements – including requirements relating to an AIF’s annual report, requirements for disclosure to investors, and reporting obligations to competent authorities in relation to issues such as leverage, investment strategies and valuation procedures; and

• The obligations and protections in place where an AIF acquires control of non-listed companies and issuers.

Additionally, there must be appropriate co-operation arrangements in place between the member state and home regulator for the purpose of systemic risk oversight and exchange of information in line with International standards.

The Committee of European Securities Regulators will be tasked with developing guidelines for such co-operation arrangements.

The Financial Supervision Commission ("the Commission") is a full signatory to the IOSCO Multi-Lateral Memorandum of Understanding and is confident that it meets world class standards in relation to international co-operation.

Other matters that may be of relevance to an assessment of a 3rd Country could include: -

• international standing of the jurisdiction including IMF reports on anti-money laundering and countering terrorist financing and regulatory standards;

• reciprocal access for EU funds to the 3rd country jurisdiction; and

• tax information exchange agreements between relevant non-EU and EU authorities.

The Commission believes that the Island’s regulatory environment and established co-operation agreements and practices mean that it is well placed to respond to the challenges and opportunities of the AIFMD. However, until the fine detail is known, together with the EU assessment process for judging equivalence, the final position has yet to be determined.

The Island, and its advisers, have maintained and will continue to maintain, a careful watching brief on developments. The Commission has undertaken to prepare for the AIFMD in order to react quickly as developments occur in the Island’s and the Fund Management Industry’s interests.

FATF : Ongoing work to identify jurisdictions with strategic AML / CFT deficiencies

As part of on-going efforts to identify and work with jurisdictions with strategic AML/CFT deficiencies, the FATF has updated its two public documents issued in February 2010:

• FATF Public Statement
• Improving global AML / CFT Compliance : On-going Process

Vice-Prime Minister Jugnauth Reaffirms Vision of Making of Mauritius Duty-Free Island

The Vice-Prime Minister, Minister of Finance and Economic Development, Mr Pravind Jugnauth, has reaffirmed his determination and conviction that Mauritius should become a duty-free island and a shopping paradise with top class physical infrastructure and that these visions should be implemented concurrently.

The Vice-Prime Minister was speaking yesterday, at the presentation and launch of the Grand Baie-La Croisette project, at La Cannelle, Domaine les Pailles.

Mr Jugnauth recalled that the decision to make Mauritius a duty-free island got a “better than expected enthusiastic response” from both local and international business communities when it was announced in the 2005/2006 Budget.

According to him, today there are ample reasons for the government to support the duty-free island concept and the development of Mauritius into a shopping paradise, for the country has set its goal on attracting two million tourists a year and with modernised infrastructures at the port and the airport as well as cruise tourism which is expanding at a fast pace, the implementation of such a project will create new economic space for investments, business and trade that will make up for the foregone government revenue.

In Mr Jugnauth's view, ventures such as La Croisette should be a major source of encouragement for the government to reaffirm its commitment to the shopping paradise concept. He added that the project, to be implemented by the Fon Sing Group, bears testimony to the innovatory and avant-garde capabilities of the local business community.

Grand Baie-La Croisette project consists of an integrated complex comprising commercial, residential and office spaces, to be implemented over an area of some fifteen acres of land at a total cost of about Rs 2 billion. The first phase will start in two months. The project will create around 500 job opportunities and with its mixed-use aspect and integrated feature, it is expected to have a major impact on the real estate infrastructure in the northern region and in the country at large.

Deloitte 2010 Global Manufacturing Competitiveness Index

A report issued today indicates that access to talented workers capable of supporting innovation is the key factor driving global competitiveness at manufacturing companies—well ahead of “classic” factors typically associated with competitive manufacturing, such as labor, materials, and energy. Further, difficulties accessing the right kind of talent are likely to contribute to the United States’ becoming less globally competitive in the next five years.

These are the findings of the 2010 Global Manufacturing Competitiveness Index, a research report from Deloitte’s Global Manufacturing Industry group and the U.S. Council on Competitiveness. The report is based on the responses of more than 400 chief executive officers and senior manufacturing executives worldwide to a survey conducted in late 2009 and early 2010. It also draws on select interviews with key manufacturing decision makers.

“At its broadest level, the study confirms that the global competitive landscape for manufacturing is undergoing a transformational shift that will reshape the drivers of economic growth, high-value job creation, national prosperity, and national security,” according to Deborah L. Wince-Smith, president and chief executive officer of the U.S. Council on Competitiveness.

A key finding of the report was that talent-driven innovation ranked the most significant driver of competiveness in most markets. The top three drivers─talent-driven innovation, cost of labor and materials, energy cost and policies─remain relatively stable across all geographic regions, with the most notable differences being Mexico and South America, where ‘quality of physical infrastructure’ outranked talent.

“A strong manufacturing sector is a crucial component of a country’s intellectual capital, innovation capacity, and economic prosperity. In today’s environment, manufacturing competitiveness is driven by an empowered talent base, especially as manufacturers around the world integrate technology platforms and interfaces into their products,” said James Quigley, CEO, Deloitte Touche Tohmatsu. “From the Americas to Europe and from Asia, to Africa, understanding the public policy and market forces that shape the manufacturing landscape is essential to winning in the global economy.”

Newcomer economies to gain ground — while United States slips

The report also identified the emergence of a new group of leaders in the manufacturing competitiveness index over the next five years. These include Mexico, Poland, and Thailand—countries not always considered alongside longer-standing, up-and-comers like Brazil and Russia. Not unexpectedly, Asian giants like China, India, and the Republic of Korea are projected to dominate the Index in five years, as they do now.

Further, dominant manufacturing super powers of the late 20th century—the United States, Japan, and Germany—are expected to become less competitive in five years. Other Western European nations will be similarly challenged, especially the Czech Republic, the Netherlands, Switzerland, the United Kingdom, Ireland, Italy, and Belgium—a finding made more dramatic by the continuing upheaval of the Euro.

“All Western European nations show an expected decline in rank over the next five years, which should be a cause for concern across the Continent,” says Hans Roehm, Global Managing Partner, DTT Global Manufacturing Industry Group.

The report’s research-team leader and co-author, Craig Giffi, who serves as vice chairman and national industry leader for consumer and industrial products at Deloitte LLP, in the United States, went on to explain that the ‘epicenter’ for manufacturing continues to shift to emerging markets—Asia, in particular “What had been the world order in the second half of the late 20th century, is giving rise to new manufacturing paradigms. But even with the rise of China, India, and Korea and the overall competitive repositioning of nations, the United States, Germany, and Japan are still formidable and very competitive.”

However, the study also shows the United States slipping in rank from fourth to fifth by 2015, the highest ranking country to show a decline—while China and India remain in first and second place. “This finding deserves careful consideration as the U.S. evaluates its global competitiveness position,” cautions Giffi.

Competing seen as easiest in Asia, tougher in United States and Europe

The report identified a clear geographical divergence in the perception of public policy support for competitiveness. Most respondents from China think that their government makes competitiveness easy compared to respondents in Europe and the United States, with 70 percent of them citing government support of science, technology, and innovation as advantageous. The European respondents identified public policy support for infrastructure development (46.1 percent), science and technology and innovation (43.4 percent), and intellectual property protection (42.1 percent) as their advantage. Respondents in the Unites States cited intellectual property policies (75.5 percent) and technology policies (61.3 percent) as their competitive edge.

Respondents in each region also identified differing policies that inhibit competitiveness. In China, these included immigration policies (32.1 percent) and healthcare (27.7 percent); in the United States, government intervention and ownership in companies (59.2 percent), corporate tax policies (53.1 percent), healthcare policies (51 percent), product liability laws (42.9 percent) and immigration policies (32.7 percent); and in Europe labor laws and regulations (42.1 percent), environment policies (36.8 percent) and energy policies (31.6 percent).

2010 Global Manufacturing Competitiveness Index

Appleby wins Offshore Law Firm of the Year 2010 at The Lawyer Awards in London

Appleby, the world’s largest provider of offshore legal, fiduciary and administration services, was named “Offshore Law Firm of the Year” at The Lawyer Awards held in London on Tuesday 22 June 2010. John Bisson, Chairman of Appleby’s Executive Board collected the award on behalf of the firm at a glittering awards ceremony held at Grosvenor House and attended by over 1,000 top international lawyers.

The award is presented to the firm which has demonstrated superior strategic clarity, technical legal excellence, quality control and growth in market share across the offshore market.

In the last 12 months, Appleby has opened offices in the Seychelles, Bahrain and Guernsey and in 2009, was joined by leading Isle of Man law firm Dickinson Cruickshank.

In 2009/10 the firm has added 5 lateral partner appointments, 6 partner promotions and 11 promotions to Counsel to support growth across the Appleby group.

Commenting on the award last night Group Managing Partner Peter Bubenzer said: “We are really delighted to have won this prestigious international award. It has been our strategic goal to become the world’s leading provider of offshore legal and fiduciary services and we are pleased that our efforts have been recognised by our peers with this award. The award underscores our market leading position and the breadth and depth of experience and expertise we offer clients, combined with an unrivalled choice across the world’s major offshore financial centres.”

Appleby now has 12 offices worldwide in the key offshore centres of Bermuda, the British Virgin Islands, Cayman Islands, Isle of Man, Jersey, Mauritius, Seychelles and Guernsey, as well as the leading financial centres of London, Hong Kong, Zurich and Bahrain.

Eurekahedge launches UCITS Hedge Fund Database and Index

Eurekahedge announced today the launch of its new UCITS Hedge Fund Database and Index, covering 600 funds and representing more than US$100 billion in assets.

According to the latest data by Eurekahedge as of June 2010, overall assets in UCITS hedge funds edged up by nearly 15% since the start of the year to peak at nearly US$100 billion with 980 funds globally. 2009 returns stand at 21.77%, with 170 launches seen in the year. The first five months of 2010 have witnessed another 125 funds starting up, with total net inflows standing at US$12 billion. With more funds being launched each week, Eurekahedge is expecting the total number to hit 1,200 by the end of 2010.

"UCITS hedge funds now account for 7% of the total hedge fund universe of US$1.5 trillion but have attracted 20% of the net inflows into the industry year-to-date 2010 - firm evidence of increasing investor appetite for this product," said Alexander Mearns, CEO of Eurekahedge.

Eurekahedge has been closely monitoring these funds since last year and is currently collecting information from a further 380 funds yet to be added to the database in the coming months. Information on individual funds in the new database includes strategies, instruments traded by the funds, service providers, unique features of the funds, such as fee structures and liquidity, and comparative industry statistics and calculations.

Eurekahedge has also recently added new fields to its existing suite of alternative data products including details of secondary investment mandates, investments in private placements, managed accounts offered, unique fund identifiers, executive/secondary and synthetic prime broker mandates, and further expansion of fee’s charged, leverage and exposure fields.

Asian Tax Authorities Symposium : 14-15 June 2010, Kuala Lumpur

The inaugural Asian Tax Authorities Symposium (ATAS) was successfully hosted on 14-15 June 2010 in Kuala Lumpur, Malaysia. ATAS was organised in partnership by the International Bureau of Fiscal Documentation (IBFD), the Financing for Development Office (FfDO) of the United Nations, the Inland Revenue Board, Malaysia (IRBM) and the Royal Norwegian Ministry of Foreign Affairs (MFA).

ATAS was attended by high-level tax officials from 17 Asia-Pacific jurisdictions, i.e. Afghanistan, Australia, Cambodia, India, Indonesia, Korea (Rep.), Malaysia, Maldives, Mongolia, Nepal, Philippines, Singapore, Sri Lanka, Thailand, Timor-Leste and Vietnam. Many of the participants spoke and presented on pertinent tax matters and issues arising out of international taxation, especially from a developing country perspective. Additional presentations were made by experts from Australia, China, Japan, Norway, the Netherlands and the United Nations FfDO.

The Symposium was opened by Tan Sri Hasmah Abdullah, CEO/Director-General of Inland Revenue, IRBM and was followed by welcome addresses from Dr. Jomo Kwame Sundaram, Assistant Secretary-General for Economic Development, United Nations (DESA), and Professor Dr. Frans Vanistendael, the Academic Chairman of the IBFD and Symposium Chairman.

Tan Sri Hasmah Abdullah, in her welcome address, noted that it was “... timely that we (the participants) should deliberate issues on cross-border corporate and individual taxation, the taxation of natural resources and also the impact of tax treaties, which are highly relevant to the development of taxation in this region.” Dr. Jomo Kwame Sundaram noted that a convergence of several factors has increased the demand for, and pace of, international tax cooperation recently in both developed and developing countries. The costs of tax avoidance and evasion to countries, taxpayers and the achievement of development goals represented a common concern where greater cooperation among United Nations members was especially urgent.

As a non-profit independent research institute, established in 1938, with a long-standing history in supporting and contributing to tax research and academic activities, IBFD took the initiative in funding and organising this event together with its partners in order to promote the study of international taxation and address problems faced by Asian tax authorities. As noted by Prof. Dr. Frans Vanistendael, the IBFD has traditionally cooperated with organisations in the Western world but is starting to change its geographical focus as international tax takes on an increasingly important role in Asia. The

Royal Norwegian MFA, recognising the important role played by tax policy and administration in a country’s development, generously agreed to co-fund the Symposium. “Norway sees illicit financial flows generally, and tax evasion in particular, as huge impediments to economic development, not least in developing countries,” said Harald Tollan from the Royal Norwegian MFA. “We are delighted to support ATAS’ and IBFD’s efforts to improve tax administrations, simultaneously contributing to a stronger regional voice in international tax matters.”

The main focus of ATAS is to contribute to the building and developing of capacity in public governance for tax administration and policy, by creating and enhancing awareness in Asian tax administrations and tax policy makers of domestic and international tax issues caused by the increasing globalization of economic activities. It seeks to explore the problems and address the tax technical and capacity requirements faced by Asian tax authorities in particular and to promote the finding of solutions, especially for developing countries (including the least developed) that reflect the realities, needs and priorities of such countries. With this, ATAS wishes to enhance and promote developing country participation in developing international tax norms and in dealing effectively with such issues. Concurrently, ATAS also hopes, this time, to acquire input from its participants on important pending activities of the UN Committee of Tax Experts.

Convention entre le Gouvernement de la République française et le Gouvernement de l’île Maurice tendant à éviter les doubles impositions en matière d’impôts sur le revenu et sur la fortune

Une convention internationale ayant primauté sur la loi interne, les dispositions de la loi du 29 décembre 1976 modifiant les règles de territorialité et les conditions d'imposition des Français de l'étranger (Journal Officiel du 30 décembre 1976) ne sont applicables que si elles ne contreviennent pas aux dispositions de la convention.

Une convention fiscale conclue entre le Gouvernement de la France et le Gouvernement de l'Ile Maurice le 11 décembre 1980 publiée après ratification au Journal Officiel du 27 octobre 1982 établit un partage d'imposition sur le revenu de la part de chaque partie contractante.

En résumé, ses dispositions principales concernant un Français expatrié sont les suivantes :

- Sauf accords particuliers prévoyant des régimes spéciaux en cette matière, les salaires, traitements et autres rémunérations similaires qu'une personne domiciliée dans l'un des deux Etats contractants reçoit au titre d'un emploi salarié ne sont imposables que dans cet Etat, à moins que l'emploi ne soit exercé dans l'autre Etat contractant. Si l'emploi est exercé dans l'autre Etat contractant, les rémunérations reçues à ce titre sont imposables dans cet autre Etat.

- Nonobstant les dispositions du paragraphe ci-dessus, les rémunérations qu'une personne domiciliée dans un Etat contractant reçoit au titre d'un emploi salarié exercé dans l'autre Etat contractant ne sont imposables que dans le premier Etat si

-* le bénéficiaire séjourne dans l'autre Etat pendant une période ou des périodes n'excédant pas au total 183 jours au cours de l'année fiscale considérée ;

-*les rémunérations sont payées par un employeur qui n'est pas domicilié dans l'autre Etat ;

-* les rémunérations ne sont pas déduites des bénéfices d'un établissement stable ou d'une base fixe que l'employeur a dans l'autre Etat.

- Nonobstant les dispositions précédentes du présent article, les rémunérations afférentes à une activité exercée à bord d'un navire ou d'un aéronef en trafic international ne sont imposables que dans l'Etat contractant où l'entreprise a son domicile.

Les traitements, salaires, indemnités ou émoluments, pensions et rentes viagères payés par des personnes physiques ou morales - autres que l'un des Etats contractants ou les collectivités publiques ou personnes morales de droit public à caractère administratif de ces Etats - ne sont imposables au titre du versement forfaitaire à la charge des employeurs et débirentiers ou de la taxe sur les salaires que dans l'Etat où ces employeurs ou débirentiers ont leur domicile ou un établissement stable ou base fixe qui supportent la charge de ces rémunérations.

1.La notion d’établissement stable et de résidence

L’expression « résident d’un État contractant » désigne « toute personne qui, en vertu de la législation de cet État, est assujettie à l’impôt dans cet État, en raison de son domicile, de sa résidence, de son siège de direction, ou de tout autre critère de nature analogue. Toutefois, cette expression ne comprend pas les personnes qui ne sont assujetties à l’impôt dans cet État que pour les revenus de sources situées dans cet État ou pour la fortune qui y est située » (article 4).

Lorsqu’une personne physique est considérée comme résident à la fois en France et à Maurice, l’article 4 de la convention fiscale prévoit qu’elle est réputée résidente de celui des deux États sur le territoire duquel elle dispose d’un foyer d’habitation permanent, cette expression désignant le lieu où cette personne et sa famille demeurent habituellement. Si elle dispose d’un tel foyer permanent d’habitation dans chacun des deux États, elle est considérée comme résident de l’État où elle possède la nationalité.

L’« établissement stable » (article 5) désigne une installation fixe d’affaires par l’intermédiaire de laquelle une entreprise exerce tout ou partie de son activité. L’expression « établissement stable » comprend notamment :

• · un siège de direction, une succursale, un bureau, une usine, un atelier, et une mine, un puits de pétrole ou de gaz, une carrière ou tout autre lieu d’extraction de ressources naturelles ;
• · un chantier de construction ou de montage ne constitue un établissement stable que si sa durée dépasse douze mois.

« Nonobstant les dispositions précédentes du présent article, on considère qu’il n’y a pas «établissement stable» si :

• · il est fait usage d’installations aux seules fins de stockage, d’exposition ou de livraison de marchandises appartenant à l’entreprise ;
• · des marchandises appartenant à l’entreprise sont entreposées aux seules fins de stockage, d’exposition ou de livraison ;
• · des marchandises appartenant à l’entreprise sont entreposées aux seules fins de transformation par une autre entreprise ;
• · une installation fixe d’affaires est utilisée aux seules fins d’acheter des marchandises ou de réunir des informations, pour l’entreprise ;
• · une installation fixe d’affaires est utilisée aux seules fins d’exercer, pour l’entreprise, toute autre activité de caractère préparatoire ou auxiliaire ;
• · une installation fixe d’affaires est utilisée aux seules fins de l’exercice cumulé d’activités mentionnées ci-dessus, à condition que l’activité d’ensemble de l’installation fixe d’affaires résultant de ce cumul garde un caractère préparatoire ou auxiliaire ».

« Nonobstant les dispositions des paragraphes 1 et 2, lorsqu’une personne – autre qu’un agent jouissant d’un statut indépendant auquel s’applique le paragraphe 7 – agit pour le compte d’une entreprise et dispose à Maurice de pouvoirs qu’elle y exerce habituellement lui permettant de conclure des contrats au nom de l’entreprise, cette entreprise est considérée comme ayant un établissement stable à Maurice pour toutes les activités que cette personne exerce pour l’entreprise, à moins que les activités de cette personne ne soient limitées à celles qui sont mentionnées au paragraphe 5 et qui, si elles étaient exercées par l’intermédiaire d’une installation fixe d’affaires, ne permettraient pas de considérer cette installation comme un établissement stable selon les dispositions de ce paragraphe ».

« Une entreprise n’est pas considérée comme ayant un établissement stable à Maurice du seul fait qu’elle y exerce son activité par l’entremise d’un courtier, d’un commissionnaire général ou de tout autre agent jouissant d’un statut indépendant, à condition que ces personnes agissent dans le cadre ordinaire de leur activité ».

« Le fait qu’une société qui est un résident en France, contrôle ou est contrôlée par une société qui est un résident à Maurice ou qui y exerce son activité (que ce soit par l’intermédiaire d’un établissement stable ou non) ne suffit pas, en lui-même, à faire de l’une quelconque de ces sociétés un établissement stable de l’autre ».

2. Le mécanisme de non-double imposition

• · Article 24.1 : En ce qui concerne la France, les doubles impositions sont éliminées de la manière suivante : les revenus qui proviennent de Maurice, et qui sont imposables, ou ne sont imposables, qu’à Maurice conformément aux dispositions de la présente Convention, sont exonérés des impôts français. Les revenus d’intérêts, de redevances, de professions indépendantes, de jetons de présence, et d’artistes et sportifs provenant de l’île Maurice « sont imposables en France pour leur montant brut. L’impôt mauricien perçu sur ces revenus ouvre droit au profit des résidents de France à un crédit d’impôt correspondant au montant de l’impôt mauricien perçu ». En ce qui concerne les dividendes provenant de Maurice, « ils sont imposables en France […] pour leur montant brut. Les résidents de France percevant de tels revenus ont droit à un crédit d’impôt correspondant à 25% du montant de ces dividendes. »
• · Article 26.1 : « Lorsqu’une personne estime que les mesures prises par un État contractant ou par les deux États contractants entraînent ou entraîneront pour elle une imposition non conforme aux dispositions de la présente Convention, elle peut, indépendamment des recours prévus par le droit interne de ces États, soumettre son cas à l’autorité compétente de l’État contractant dont elle est un résident […] ».

Il n’y a désormais plus de formalités à accomplir l’année du transfert de domicile à l’étranger. Toutefois, les impôts directs (impôt sur le revenu, impôts fonciers, etc.) déjà mis en recouvrement avec l’envoi d’un avis d’imposition, sont immédiatement exigibles, de même que les impositions en cours. L'obtention d'un quitus fiscal vous assure la régularité de votre situation fiscale.

L'année suivant le départ, à défaut de pouvoir déclarer par Internet, les déclarations de revenus pour l’année entière devront être adressées au service des impôts habituel (et à la date habituelle, à savoir le 31 mai). Ce service transmettra la déclaration au Centre des Impôts des Non-Résidents pour traitement. Ce centre est l’interlocuteur unique pour les Français installés à l’étranger pour les questions relatives aux demandes de renseignement, au dépôt des déclarations et au paiement de l’impôt.

3. Le régime conventionnel d’imposition sur les dividendes

Le terme " dividendes " désigne, aux termes de la Convention, « les revenus provenant d'actions ou bons de jouissance, parts de mine, parts de fondateur ou autres parts bénéficiaires à l'exception des créances, ainsi que les revenus d'autres parts sociales soumis au même régime fiscal que les revenus d'actions par la législation de l'Etat dont la société distributrice est un résident ».

« Les dividendes payés par une société qui est un résident d’un Etat à un résident de l’autre Etat sont imposables dans cette autre Etat ». Cela signifie que si une société résidente à Maurice verse des dividendes à un résident français, ces dividendes seront imposés selon la loi française et inversement.

« Toutefois, ces dividendes sont aussi imposables dans l’Etat dont la société qui paie les dividendes est un résident, et selon la législation de cet Etat, mais si la personne qui reçoit les dividendes en est le bénéficiaire effectif, l’impôt ainsi établi ne peut excéder :

• · 5% du montant brut des dividendes si le bénéficiaire effectif est une société (autre qu’une société de personnes) qui détient directement au moins 10% du capital de la société qui paie les dividendes
• · 15% du montant brut des dividendes dans tous les autres cas.

4. Le régime conventionnel d’imposition sur les intérêts

Le terme "intérêts" désigne « les revenus des créances de toute nature, assorties ou non de garanties hypothécaires ou d'une clause de participation aux bénéfices du débiteur, et notamment les revenus des fonds publics et des obligations d'emprunts, y compris les primes et lots attachés à ces titres ».

Les intérêts sont imposables dans l’Etat de résidence si la personne qui reçoit les intérêts en est le bénéficiaire effectif et si ceux-ci sont payés à cet Etat, à un organisme public de cet Etat ou à un établissement bancaire de cet Etat.

5. Le régime conventionnel d’imposition sur les redevances

Le terme "redevances" désigne « les rémunérations de toute nature payées pour l'usage ou la concession de l'usage d'un droit d'auteur sur une œuvre littéraire, artistique ou scientifique, y compris les films cinématographiques et les œuvres enregistrées pour la radiodiffusion ou la télévision, d'un brevet, d'une marque de fabrique ou de commerce, d'un dessin ou d'un modèle, d'un plan, d'une formule ou d'un procédé secrets, ainsi que pour des informations ayant trait à une expérience acquise dans le domaine industriel, commercial ou scientifique».

Les redevances sont imposables dans le pays de résidence si la personne en est le bénéficiaire effectif. Maurice est toutefois autorisé à prélever 15% du montant brut des redevances.

6. Le régime conventionnel d’imposition sur les gains en capital

Le régime d’imposition des gains sur le capital précise les conditions dans lesquelles sont imposés les gains provenant de la cession de biens immobiliers, d’actions et parts de sociétés et de tout autre bien. Le principe est celui de l’imposition dans l’État de résidence, donc en principe en France.

Outstanding Value of UK Bonds up 5 per cent as Government Issuance Grows

• Nominal value of bonds outstanding in UK up 5% in 2009 to £3,353bn
• UK Government net debt issuance up over two-thirds to £211bn
• Amounts outstanding in global bond markets up 10% to $91 trillion
• Credit downgrades in some Euro-area countries result in widening of bond yield spreads between these countries and other EU members
• Corporate bond market in Europe to expand as companies diversify sources of funding

The nominal value of bonds outstanding of UK-based issuers totalled a record £3,353bn at the end of 2009, up 5% on the previous year. The figures are revealed today in the Bond Markets 2010 report issued by TheCityUK, a new independent membership body, promoting the UK financial and related professional services industry.

UK Government net debt issuance, which was below £50bn in the years prior to the economic crisis, increased to £211bn in the financial year 2009/10 and is likely to range between £100bn and £150bn over the next three years. The outstanding value of UK public sector net debt grew by 20% in 2009/10 to £890bn. Nearly £120bn of this was from financial sector interventions. Demand for UK bonds has been underpinned by the Bank of England's quantitative easing programme.

The outstanding volume of international bonds in the UK, which account for 70% of the UK bond market, increased marginally in 2009 to £2,373bn, after nearly doubling in value in the two previous years. London remains the leading centre for international bond trading with an estimated 70% of secondary market turnover.

Global trends: The report also reveals that overall amounts outstanding on the global bond market increased by 10% in 2009 to a record $91 trillion. Most of this was in domestic bonds with the US as the largest market accounting for 34% of the value outstanding, followed by Japan 13%. The UK's share was 6%. Concerns about the ability of some countries to continue to finance and service their debt have come to the forefront since late 2009. This was partly a result of large public debt taken on by governments to reverse the economic downturn and finance bank bailouts. The downgrades of Greece's credit rating, along with subsequent cuts in Ireland, Spain and Portugal have added to the negative sentiment. This has resulted in the tightening of market conditions for government refinancing in these countries.

Marko Maslakovic, Senior Manager, Economic Research at TheCityUK, said: "The corporate bond market began 2010 at a strong pace following on from the rally in 2009 which drove borrowing costs sharply lower. Issuance has however stalled due to mounting concerns over public debt problems in some Euro area countries. Europe is nevertheless moving towards a more US-style bond market as companies there increasingly diversify away from reliance on banks for funding."

Bond Markets 2010 report

Playing to its Strengths : Rethinking the UK's Role in a Changing World

Briefing Paper
Robin Niblett, June 2010

• Structural shifts in the global economic and political centre of gravity from West to East, growing competition for natural resources, new risks emanating from the most fragile states and pressure to reform structures of global governance will all affect the UK's long-term security and prosperity.
  
• A global role for the UK is therefore a necessity, not a luxury. But its relative place in the world and the legitimacy of its stake in the global system are under serious pressure, not least because of the perceived flaws of the Anglo-Saxon economic model following the global financial crisis.
  
• Britain needs to focus on core strategic objectives that go beyond crisis management. Central among these should be the promotion of open markets that can help deliver sustainable global growth even in this period of economic uncertainty.
  
• The UK possesses considerable strengths through which it can advance its national interests, particularly in the areas of diplomacy, finance and knowledge. It will remain a top-ten global military power and retains important comparative economic advantages.
  
• Britain sits at the heart of the world's leading international organizations and is well placed to deepen its relations with the large number of medium-sized countries in key regions that have traditionally stood back from engaging meaningfully in these institutions, but whose influence is now increasing.

Mauritius : Hedge Funds (Global CIS / Closed-end Fund)

There is no dedicated hedge fund regulatory regime in Mauritius, hedge funds are structured and licensed as a Collective Investment Scheme or a Closed-end Fund.

A Collective Investment Scheme (“CIS”) is defined under the Securities Act 2005 (“SA 2005”) as a scheme approved by the Financial Services Commission (FSC) in Mauritius:

• whose sole purpose is the collective investment of funds in a portfolio of securities, or other financial assets, real property or non-financial assets as may be approved by the FSC ;
  


• whose operation is based on the principle of diversification of risk;
  


• that has the obligation, on request of the holder of the securities, to redeem them at their net asset value, less commission or fees; and
  


• where the participants do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management.

• includes closed-end funds whose shares or units are listed on a securities exchange; but
  


• excludes such schemes as are specified in Part II of the Schedule SA 2005.

A Closed-end Fund means an arrangement or a scheme, other than a CIS, whose object is to invest funds, collected from investors through an offer or from sophisticated investors, in a portfolio of securities, or in other financial or non-financial assets, or real property.

A "Global scheme" is defined under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) as a company or any other legal entity approved by the FSC, holding a Category 1 Global Business Licence (GBL 1) and authorized to carry out activities falling within the definition of a Collective Investment Scheme.

Conditions applicable to Global schemes

The FSC may grant an authorisation for a Global scheme provided that:

1. information relating to the CIS Manager and the custodian as prescribed in the Regulations is submitted with the application for authorisation;
   


2. a CIS administrator [e.g. OCRA (Mauritius) Limited] with a place of business in Mauritius is appointed;
   


3. the accounting and reporting services are carried out by the CIS Manager, or the CIS Administrator of the scheme, having a place of business in Mauritius.
   


4. The prospectus or other offering document contains the following statements in a prominent position:
   
   "Investors in [name of the Global scheme] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   


5. a certified copy of the prospectus or other offering document filed in a jurisdiction where the collective investment scheme is regulated or exempted from regulation is filed with the FSC;
   


6. information is provided on the CIS Manager and the custodian, including name and registered addresses and where regulated, if applicable;
   


7. information is given on whether the collective investment scheme is regulated, or shall be subject to regulation, in any jurisdiction and if so, a copy of the authorisation or similar consent of the regulator and if not, indication on what basis it is exempted from securities regulation in other jurisdictions;
   


8. adequate measures are taken to prevent money laundering and financing of terrorism and provided that the FSC is satisfied that these measures meet legislative requirements.

An authorisation under section 97(5) SA 2005 may be granted subject to such terms and conditions the FSC considers necessary or desirable for the protection of participants.

Subject to FSC approval, a Global scheme may appoint and retain a CIS Manager and/or a custodian established in a foreign jurisdiction.

An “Expert Fund” is defined as a fund which is only available to expert investors. A Collective Investment Scheme (“CIS”) may apply to the Financial Services Commission (“FSC”) under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) for authorisation as an expert fund.

Such application must include the following documents / information:

• constitutive document of the scheme;
  
• measures taken to prevent money laundering and financing of terrorism;
  
• latest audited financial statements;
  
• a copy of the offering document given to potential investors; and
  
• if applicable, information on the CIS manager as requested in regulation 6.

Conditions applicable to an Expert Fund

1. An expert fund shall only be available to expert investors.
   
2. An expert fund may appoint a manager who, where appointed, shall be the holder of:
   
   (a) a CIS manager licence; or
   
   (b) a licence issued by a regulatory body in a jurisdiction having comparable regulation as Mauritius for investor protection (e.g. FSA in UK or SEC in US)
   
   
3. The CIS manager of an expert fund need not be resident in Mauritius.
   
4. The Board of the fund or the CIS manager where appointed must satisfy itself that the fund is and continues to be managed in accordance with the fund’s constitutive documents.
   
5. The Board of the fund, or the CIS manager where appointed, shall be responsible for ensuring that the provisions of these Regulations applicable to expert funds are complied with.
   
6. The expert fund shall accept as investors in the fund, only such persons as the Board or CIS manager where appointed is satisfied are expert investors.
   
7. The offering document or any other similar document of an expert fund shall:
   
   (a) contain a statement to the effect that the expert fund shall be available only to expert investors,
   
   (b) contain in a prominent position, the definition of an expert investor; and
   
   (c) shall have the following statements in a prominent position -
   
   "Investors in [name of the expert fund] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   
   
8. In accordance with section 30 of the Financial Services Act 2007 the audited accounts of the expert fund shall be filed by the scheme, the CIS manager or the CIS Administrator as appropriate.

Expert Investor

An “expert investor” means-

(i) an investor who makes an initial investment, for his own account, of no less than US$ 100 000; or

(ii) a sophisticated investor as defined in the Securities Act 2005 or any similarly defined investor in any other securities legislation (e.g. an accredited investor under US federal securities laws)

Exemptions for an Expert Fund

An expert fund, subject to authorisation from the FSC, shall be exempt from the provisions of the Regulations except for regulations 78 to 81 and Part I and XII.

Mauritius : A Listing Venue for Global and Specialised Funds

The Stock Exchange of Mauritius Ltd (SEM) is committed to positioning itself as an attractive location for the listing of investment funds. It has developed a specific investment funds listing regime tailored to provide a streamlined and progressive listing process for a wide variety of fund structures.

Combining a comprehensive set of Listing Rules, a commitment to aggressive timings on processing listing applications and a flexible and proactive listing process, the listing regime is highly transparent and user-friendly and has enabled the SEM to ensure flexibility of approach to embrace new product types, while maintaining the integrity of listing on a well-regulated Exchange.

This note describes some of the key changes that have recently been brought to the Listing Rules to enable the SEM raise its profile as a listing venue of choice for funds, and to ensure an alignment of the Listing Rules with the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008. It also underscores the numerous advantages that funds can derive from a listing on the SEM, describes what the listing application process entails and emphasizes some of the key-post-listing obligations for funds.

KEY CHANGES TO THE LISTING RULES

The implementation of the Securities Act in September 2007 has enabled a wider coverage of activities within the Securities Industry and laid down the regulatory framework for Collective Investment Schemes (CIS). The introduction of the Securities (Collective Investment Schemes and closed-end funds) Regulations in 2008 has set the operating framework for Global Schemes and a wider variety of Specialist Funds. To capture the listing potential of these funds, the SEM has reviewed Chapter 16 of the Listing Rules and tailored it to reflect the specific requirements of the Specialist Funds.

The newly revamped Listing Rules are based on a simplified regulatory environment to cater for the evolving nature of the funds industry. Compliance with the general conditions for listing has been alleviated for the entities to be listed and is subject to a number of modifications relative to the specificities of each type of vehicle.

WHY LIST ON SEM?

A listing on the SEM can generate a number of important advantages to a Fund. The key advantages can be summarized as follows:

• A listing on the SEM will enhance the attractiveness of the Fund from an investors’ perspective. The SEM is a well-regulated Exchange which has gained recognition through its accreditation to various international bodies, including the World Federation of Exchanges (WFE), South Asian Federation of Exchanges (SAFE), African Securities Exchanges Association (ASEA) and Committee of SADC Stock Exchanges (COSSE).
• New Chapter 16 ensures flexibility of listing through tailor-made vehicles that are adapted to fund-specific circumstances and objectives of Global Business Schemes and Specialised Funds.
• A listing constitutes one of the ways of demonstrating substance and added value.
• The regulatory gap between the compliance requirements of the CIS Regulations and Chapter 16 of the Listing Rules is thin, which ensures little difference in terms of compliance costs between a listed and an unlisted CIS.
• A listing on the SEM can be particularly important where a fund is marketed to institutional investors, whose own rules may prohibit or restrict investment in unlisted securities.
• A listing can, therefore, increase a fund’s potential investor base.
• A listing allows investors to mark their fund investment to market, namely for those funds which are actively traded.
• The SEM ensures a speedy processing of applications with a turnaround time of 2 weeks if application is complete.
• A listing on the SEM does not require the applicant to have registered sponsors as in other jurisdictions. Financial advisers/legal experts may handle applications and deal with the SEM.
• The offer document registered with the FSC may also serve as Listing Particulars.
• SEM’s trading infrastructure is tuned to accommodate multi-currency trading (USD, GBP,EURO, etc.).
• Listing fees are set at very competitive levels (refer to Appendix 7 of the Listing Rules).

HOW TO LIST?

A smooth process has been ensured for the listing of global funds on the SEM, which comprises the following distinct stages.

Step 1: Appoint an authorized representative.

An authorized representative must be appointed by every applicant. The authorized representative is responsible for dealing with the SEM on all matters in relation to the application and for ensuring the applicant’s suitability for listing prior to any submission to the SEM.

Step 2: Comply with conditions for listing.

Every applicant and its authorized representative must be satisfied that it can meet all the conditions for listing prior to applying to the SEM. The SEM should be consulted in advance in case of doubt.

Step 3: Submit draft listing particulars/prospectus to the SEM for approval.

An applicant must submit, through its authorized representative, a Listing Particulars for review and comments by the SEM. In lieu of a full-fledged Listing Particulars, the offer document registered with the Financial Services Commission during the previous 12 months may also be accepted by the SEM.

Step 4: Approval of final Listing Particulars/ offer document.

Once approved by the SEM, the Listing Particulars/offer document must be signed off by the directors.

Step 5: Listing.

The listing of the fund will take place on the business day communicated by the SEM.

Step 6: Ongoing Obligations.

A fund, after admission to listing, must comply with the ongoing obligations of the SEM, as specified under the Listing Rules.

APPLICATION

Applications for the listing of global and specialised funds must be channelled through the Listing Division of the Stock Exchange of Mauritius Ltd and the main documents that must be filed are as follows:

• Formal application letter
• Draft Listing Particulars (offer document)
• Certificate of Incorporation or equivalent
• Certified copy of issuer’s Constitutive documents
• Certified copies of resolutions authorising issue of the securities
• Issuer’s undertaking and directors’ declarations and undertakings

CONTINUING OBLIGATIONS

Once listed, a fund is expected to abide to a number of ongoing reporting obligations as prescribed under Chapter 16 of the Listing Rules. These obligations are imposed in order to maintain an orderly and transparent market in the units of the listed funds, to ensure the ongoing sustainability of the funds for listing, to protect shareholders’ interests and to ensure that all relevant information is disseminated without delay. Some of the key reporting obligations can be summarized as follows:

• Prompt notification to SEM and shareholders of material events to allow them to evaluate the financial position of the fund and to avoid the creation of a false market. Material events are circumstances that may be expected to affect market activity or the prices of listed securities.
• Filing of quarterly and annual financial statements & subsequent publication thereof
  (already a requirement under the CIS Regulations 2008)
• NAV calculations to be submitted on a regular basis, except as otherwise stated in the listing particulars or offer document of the fund.
• Material transactions (including related party transactions) to be approved by the SEM

INFORMATION TECHNOLOGY AT THE SERVICE OF LISTED COMPANIES

Accurate, up to date and readily accessible financial information is critical for investors. The SEM Automated Trading System (SEMATS) has been set up to provide investors worldwide with easy access to information.

The SEM website gives an array of information about the SEM, daily information about prices and listed issuers, listing rules & regulations, and products that may be listed. The SEM has entered into a contractual agreement with international data vendors such as Bloomberg, Reuters and Financial Times through which it regularly posts stock market statistics and other related data for the benefit and needs of potential investors.

SEM & CDS FEES

The fees that the SEM charges are highly competitive. An initial listing fee of US $1,500 and an annual fee of US $1,500 are normally applicable for a fund. CDS fees are payable by these funds who would avail themselves of CDS services and facilities.

Jersey wins Best International Finance Centre Award

Jersey’s finance industry has further enhanced its reputation, winning ‘Best International Finance Centre’ at the International Fund and Products Awards 2010 this week.

The results of the Awards, which are recognised as a key event in the field of international finance, were announced on Tuesday 15th June. Consisting of a range of categories, they feature leading financial organisations and providers based in the UK and international financial centres including Guernsey, Isle of Man, Dublin and Luxembourg, as well as Jersey.

The International Fund and Product awards have been held annually for 11 years and are judged by a panel of eight senior investment experts and advisers in the UK. The judges’ decision to select Jersey for this Award was based on the quality of its funds offering as well as its reputation on the international scene and its robust legislative and regulatory framework.

Geoff Cook commented:

“This latest endorsement for Jersey’s finance industry reinforces the excellent work that is conducted in the Jersey, the UK and Internationally, not just in the investment fund area but right across the range of financial services sectors Jersey excels in. Jersey has consistently ranked favourably in a number of influential independent indexes and we look forward to building on this performance in the coming months and years.”

Should regulators judge culture?

Unacceptable culture within firms was a major contributor to the financial crisis and so regulators should play a greater role in judging how culture drives firms’ behaviour and impacts on society as a whole, according to the chief executive of the Financial Services Authority (FSA).

In a speech at the Chartered Institute for Securities & Investment (CISI) conference in London entitled, ‘Do regulators have a role to play in judging culture and ethics?’, Hector Sants discussed his personal view that many of the causes of the financial crisis were deeply rooted in behavioural issues.

He commented that ‘even after all the supposed lessons learned exercises, we are still seeing some decisions by management in major firms that we would judge not to be prudent’ and, as a result, greater intervention is needed from regulators to ensure decisions made by firms deliver the outcomes society expects.

Hector Sants, said:

“Historically regulators have avoided judging culture and behaviour as it has been seen as too judgemental a role to play.

“However, given the issues we continue to see over time, I believe this one-dimensional approach has to be questioned. Every other aspect of the regulatory framework is under scrutiny and we should not shy away from debating the culture question.”

The FSA chief executive commented that the focus for regulators should not be to define one ‘acceptable culture’ because there are many different forms a positive culture can take. Rather, regulators should focus on what an unacceptable culture looks like and what outcomes that drives. He outlined the mechanisms by which regulators could intervene to ensure firms have the right cultures:

• ensuring firms hire managers who act with integrity, by judging competency but also ensuring they understand the need to act with integrity, deliver the right culture and are equipped to do so;
• ensuring firms have the right governance and behavioural framework to facilitate good judgement by their staff; and
• assessing the actions against society’s wider expectations not just shareholder value.

Hector Sants continued:

“I would strongly advocate intervention in the UK through changing the Companies Act framework for directors, for example. The current requirement for directors is to promote the success of the company. This is often interpreted in terms of shareholder value. Whilst this does include the need, for example, to ‘have regard to’ the impact on the community, I do not believe that is sufficient.

“There must be a stronger and more explicit obligation to wider society. There must be clear recognition of the need for institutions to contribute to the common good.”

In conclusion, Sants said:

“Determining an ethical framework is for society as a whole, not an unelected regulatory agency. However, it is, I believe, our role to police behaviour and expect firms to have the right culture which facilitates the delivery of the outcomes we expect.”

Full speech

Business Bermuda 2010 Economic Impact Study Demonstrates Depth And Mutual Importance Of Bermuda - U.S. Economic Relationship

Business Bermuda will release today its 2010 Economic Impact Study, which assesses the role that Bermuda plays in the U.S. economy and has examined Bermuda’s strong significance relative to Europe and Asia, based on economic data from 2008 and 2009. The 2010 Economic Impact Study will be issued at an evening presentation by Charles Ludolph, an expert and published author on international trade and econometrics, and Senior Vice President of Albright Stonebridge Group (ASG) on Thursday, June 17, 2010 at 4:00 pm in the Gazebo Room of the Fairmont Hamilton Princess.

According to the 2010 Economic Impact Study, Bermuda became more prominent relative to other economies that trade with the United States. U.S. exports of business and professional services to Bermuda actually increased significantly during the economic crisis. In separate but related analysis, figures show that there are a number of positive indications of a growing connection between Bermuda, Europe, the United Kingdom and Asia during 2007-2009.

Among the key highlights were:

• Notwithstanding the U.S. recession and redomestication of some U.S.-Bermudian companies to Europe, Bermudian company subsidiaries sustained more than 162,000 jobs and $40 billion in sales in the United States.
• During the 2008-2009 recession, Bermuda services trade with Europe, the United Kingdom and others increased trade to access Bermuda financial services capacity and gain access to the U.S. markets.
• Bermuda two-way services trade with Europe has grown to an estimated $16 billion annually. United Kingdom insurance and reinsurance imports from Bermuda leapt from $100 million to $1.5 billion since 2007.
• In the last three years, United Kingdom two-way trade in services with Bermuda increased by 250% seeking access to Bermuda financial platforms and relief from certain EU requirements.
• Similarly, German total trade in services with Bermuda increased by 50% driven by 100% increase in imports of financial services from Bermuda.
• Taiwan and other Asian semiconductor interests established Bermuda holding companies as platforms to access U.S. markets.
• According to economic estimates for just two European countries, Bermuda’s global economic profile grew by at least $10-$15 billion during the economic crisis.
• Some statistical indications suggest that Asian investment in Bermuda grew as Bermuda became a global gateway to access key developed markets like the United States, the United Kingdom and Canada.
• Trade relationships with the U.S. remained stable primarily because during the crisis, U.S. state and federal government capacities weakened much faster than the Bermuda financial sector and so therefore Bermuda remained a provider of critical financial capacity.

“U.S. government data revealed that Bermuda made a strong contribution to the U.S. economy throughout the 2007-2009 recession, providing jobs and capital when it was most needed," said Mr. Ludolph.

“Despite the global economic crisis, which clearly impacted everyone, this Business Bermuda 2010 Economic Impact Study shows that Bermuda continues to play a vital role in the U.S. economy and that our financial services sector has provided financial capacity that has been pivotal,” said Cheryl Packwood, CEO of Business Bermuda. “While we have certainly faced our fair share of issues, Bermuda remains strong and a vital partner that invests in the U.S., provides badly needed insurance and reinsurance services, and as importantly, is a direct and indirect source of jobs in the U.S. Bermuda has emerged as an important platform for investors from around the world including Europe, the UK, and Asia to access the U.S. market. Clearly, the efforts of Bermuda’s government to establish tax and regulatory agreements have been vital to this effort and provide assurance that we can continue to play this role in the global economy going forward.”

Ms. Packwood added, “This is a powerful story and an important message that all Bermudians can deliver as they do business around the world. I encourage everyone to take note of this study and support Bermuda’s efforts to extend its international business and economic success for decades to come.”

Executive Summary – Economic Impact Study 2010

The Bermuda-United States economic relationship remained strong throughout the global economic and financial crisis. In the last two years, overall growth in trade and investment remained at 2007 levels but did not decline. In fact Bermuda became more prominent relative to other economies trade with the United States. U.S. exports of business and professional services to Bermuda actually increased significantly during the economic crisis. In 2008 and 2009, Bermuda was the:

• Most important off-shore supplier of reinsurance, and payer of property and casualty losses to the United States.
• Second only to Canada as the most important export market for U.S. primary insurance.
• Sixth most important export market for U.S. financial services.
• Eighth most important supplier of energy shipping services to the United States.
• Fourteenth most important export market for U.S. business and professional services.
• And, in the top 20 most important export markets for total U.S. private sector services.

The Bermuda investment environment provides competitive advantages for certain U.S. businesses striving to compete globally. Bermuda’s own competitiveness in the U.S. market is based on a unique set of strategic advantages:

• Proximity to U.S capital market.
• UK and U.S.-compatible law and regulation.
• Extensive regulatory cooperation as well as recognized regulatory quality.

U.S./Bermuda Cross-Border Trade. In 2009, estimated two-way trade and multinational corporation subsidiary sales between Bermuda and the U.S. was $64 billion. Bermuda and U.S. company affiliates invested in each others markets supplied about $40 billion in two-way sales as well as $24 billion of U.S. exports and imports with Bermuda. Bermuda’s trade and investment relationship with the United States sustained 162,000 jobs in 2009.

• 94,500 U.S. jobs were created by annual U.S. exports to Bermuda.
• 66,000 U.S. jobs derived from U.S. substantially majority-owned subsidiaries of Bermuda companies

Insurance and Reinsurance. The Bermuda insurance industry, and the professional services that support that sector, are the leading foreign sources of insurance and reinsurance services to the U.S.

According to recent studies:

• Bermuda supplies 50% of Florida’s homeowner catastrophic insurance market, and offers Florida homeowners premiums that are less expensive than competitors in the United States and Europe.
• Twenty-three Bermuda reinsurance companies supply 40% of the catastrophic event property and casualty coverage for the entire U.S. market.

Bermuda insurance companies have helped stabilize the U.S. economy in the wake of numerous catastrophic events.

• In the 15 years between Hurricane Andrew (Florida, 1992) and Hurricane Ike (Texas, 2007) the United States sustained $500 billion in property and casualty losses, inclusive of earthquakes, terror attacks, etc. Of this total amount, Bermuda covered $84 billion or 16.8% of these losses.
• After Hurricane Katrina in 2005, businesses in eight Gulf Coast states, from Texas to Florida, needed $65 billion in private and public assistance to rebuild (in addition to assistance needed by homeowners). The federal government supplied $34 billion, while the rest came from insurance. It is estimated that Bermuda insurance payments to U.S. businesses supplied more than 10% of that assistance. Bermuda insurance restored or created more than 20,000 jobs in 2006 in those regional economies.

Bermuda is also a major insurer of American agricultural cropland.

• Thirty-five percent of U.S. crop insurance is underwritten by six Bermuda-owned insurance affiliates, and 55% of the gross premiums ceded by insurers to reinsurers come from Bermuda.
• In 2009, more than 250,000 U.S. farms in 40 states depended on Bermuda insurance and reinsurance firms to hedge annual crop-related risks.

Bermuda’s captive commercial liability insurance and reinsurance sector fills an important capacity shortage for U.S. companies.

• Approximately 75% of the 500 leading companies in the U.S. have captive insurance subsidiaries in Bermuda, which help provide worker’s compensation and other lines of liability coverage.

International Money Management and Investment Funds. Over the last 10 years, Bermuda has evolved into a significant international financial center, with important ties to the U.S. investment community.

• In 2008, Bermuda had more than 1,100 domiciled and regulated investment funds with almost $200 billion in net assets.
• Although difficult to estimate, it appears that U.S.-owned corporate and tax exempt funds accounted for as much as $70 billion of these assets, and U.S. individuals’ account for another $30 billion. Most of these Bermudian investments are U.S. offshore funds established by U.S. money managers.
• Bermuda provides key advantages to U.S. money managers to attract non-U.S. investors to their funds due to its proximity to the U.S., lower costs, sophisticated infrastructure, favorable tax structure and its effective and respected regulatory framework.

In turn, Bermuda is tied for tenth place as the largest foreign portfolio investor in U.S. securities, its portfolio investment doubling to $200 billion from 2000 to 2008. Furthermore, Bermudian investors are the 15th largest holders of U.S. government agency asset-backed bonds.

Shipping. Bermuda is a major contributor to U.S. energy security.

• Bermuda-domiciled shipping companies provide $1.2 billion in energy-related shipping services (oil tankers, oil rigs and LNG ships) that are designed to work with existing U.S. refineries, ports, and pipelines.
• Ships registered in Bermuda to take advantage of its regulatory policies, access to fleet financing, and access to environmental liability insurance coverage that is compliant with U.S. requirements under the U.S. Oil Pollution Act of 1990.

This study was commissioned originally in February 2009 by Business Bermuda with Charles Ludolph, an expert and published author on international trade and econometrics, and currently Senior Vice President of Albright Stonebridge Group, a global strategy firm. Mr. Ludolph prepared an update and included some high-level information on Europe and Asia as part of this year's update study. A detailed review of the methodologies used to develop the economic research can be found on page 36 through page 40 of the 2010 study.