31 July 2014

FSC Notice: Termination of the Management Licence of Murray & Collins Offshore Management Co. Ltd

The Financial Services Commission, Mauritius (the “FSC Mauritius”) wishes to inform the public that Murray & Collins Offshore Management Co. Ltd, bearing licence number MC10000101 and having its registered address at 9, Pailles Road GRNW, Port Louis, has surrendered its Management Licence in accordance with Section 28 (5) of the Financial Services Act 2007 (the “Act”) on 30 June 2014.

Pursuant to Section 28 (9) of the Act, the public is hereby notified of the termination of the Management licence of Murray & Collins Offshore Management Co. Ltd. Please note that Murray & Collins Offshore Management Co. Ltd no longer holds a valid Licence from the FSC Mauritius.

You may contact the FSC Mauritius for any further information. 

IFC Review - Isle of Man: Stability and Security in Challenging Times

Tom Maher examines how the Isle of Man has thrived through the financial crisis due to the stability and security the jurisdiction provides

IFC Review - The Netherlands: Competitive Development

Following a hectic 12 months, Leo Neve examines the Netherlands efforts to adhere to international standards for the Exchange of Information

IFC Review: FATCA and the Cyprus - US Connection

With FATCA now in force, Emily Yiolitis and Aki Corsoni-Husain highlight how Cyprus complies with the US regulations through the signing of a Model 1 IGA

IFC Review - LATAM: The Other Side of the Road

With signs of Latin America shrugging off its past and with a new sense of prosperity, Derek Sambrook examines how the region can adapt to external international pressures

IFC Review - Qatar: A World Class Business Environment

With one of the most dynamic and fast growing economies in the middle east, the Qatar Financial Centre Authority highlight the world class business enviroment the jurisdiction provides

IFC Review: Privacy, Enforcement and the Operation of an Efficient Commercial System

With demands for transparency growing, Jason Allison and Tim Buckley argue that current proposals for a beneficial ownership registry are misguided and may do more harm than good.

29 July 2014

WSJ - The Unforgettable World Cup: 31 Days of Triumph and Heartbreak in Brazil

Relive all the excitement, the artistry and the heartbreak from the opening kick to the closing ceremonies. This free Wall Street Journal e-book, with an introduction by Journal sports columnist Jason Gay, collects stories from their on-site coverage, both on and off the field, of 2014 World Cup and its host country Brazil.


Read compelling accounts from the action-filled weeks of competition, and from around the world, on the sport, the teams, the matches, the stars and the culture of Brazil, spiritual home to the globe’s most-popular pastime.

25 July 2014

Global innovation award for Jersey’s new security register

The Jersey Companies Registry, which is part of the Jersey Financial Services Commission (the “Commission”), has won a leading international award for its recently introduced Security Interests Register.

The International Association of Commercial Administrators (“IACA”), the leading global forum for international registries, presented Jersey with the award for ‘outstanding achievement in secured transaction registry innovation’.

Julian Lamb, Director of the Jersey Companies Registry, received the award while attending an IACA conference in Milwaukee, United States (“US”) in his capacity as Deputy Chairman of IACA’s international section. Jersey was one of 15 international registry systems, including those in Australia, New Zealand, the United Kingdom and states of the US, to be considered and one of only six to receive an award.

Launched in January 2014, the Security Interests Register is a fully online register of security interests that was developed by the officials at the Jersey Companies Registry following extensive consultation with the finance industry. There was also considerable collaboration with other international registries during the planning and development of the new register, which makes available a public register of security interests in Jersey for the first time.

Julian Lamb commented:

The award is especially welcome because it is given by our peers within the regulatory industry worldwide and highlights that Jersey remains at the forefront of regulatory developments in financial services. We are ahead of most other jurisdictions, with the scope and features of our online Security Interests Register, which also makes financing statements accessible to the public. It has been well received by the industry in its first few months and resonates well with the increasing global drive for greater transparency in financial services.

IACA is a North American association whose membership comprises the official business registries of the US, Canada and other international jurisdictions. It is the only registry forum which sets standards and shares system innovations with regard to secure transactions.

It is the second time in recent years that IACA has recognised developments at the Commission. In 2012, the Jersey Companies Registry was given a Merit Award jointly with the equivalent registry in Germany, for a pilot project designed to improve the electronic transfer of publically available data between registries. 

Mauritius: FSC issues Communiqué and FAQ on Management and Control of GBC2

For the purpose of increasing substance, a Mauritian resident may be allowed to hold shares in a GBC2 if it can demonstrate that the overall group structure has strong economic impact in Mauritius. The FSC Mauritius will consider, whether the proposal will generate revenue in Mauritius; whether the proposal is likely to create employment in Mauritius; or the impact of the proposal on the development of the country. 

The Guide to Global Business (Chapter 3) distinguishes the salient features of Category 2 Global Business Companies (GBC2s), indicating inter alia that ‘Mauritian residents may not hold beneficial interest’ in a GBC2.

By its very nature, GBC2s have their central management and control located outside Mauritius, are not  liable to local tax, and therefore shall not be beneficially owned by Mauritian residents. The Financial Services Commission, Mauritius (‘FSC Mauritius’) has been adopting a look-through approach to global business to encourage more economic substance, and encouraging GBC2s to be used as special purpose  vehicles in group structure. Therefore, to the extent that GBC2s demonstrate that management, control and ownership are maintained outside Mauritius, Mauritian participation will be considered in a GBC2.

Mauritius: FSC Communiqué on FATCA Implementation

FATCA - Agreement for the Exchange of Information Relating to Taxes (United States of America - FATCA Implementation) Regulations 2014

With the view to keep licensees informed of developments as regards FATCA and steps being undertaken by Mauritian authorities, the FSC Mauritius:

  • issued a Communiqué on 18 February 2013;
  • invited comments from licensees on Compliance with FATCA on 24 June 2013; and 
  • hosted the ATMC Workshop on FATCA on 13 May 2014.

Licensees are hereby informed that Mauritius signed the reciprocal Model 1 Intergovernmental Agreement (IGA) together with a Tax Information Exchange Agreement (TIEA) with the U.S. on 27 December 2013. The agreement seeks to promote transparency between the two nations regarding tax matters and forms part of the global effort to reduce tax evasion. 

Following the signature, the ‘Agreement for the Exchange of Information Relating to Taxes (United States of America - FATCA Implementation) Regulations 2014’ (GN. No. 135 of 2014 - Govt. Gazette No. 61 of  05 July 2014) was made under section 76 of the Income Tax Act to facilitate the implementation of the IGA by the Mauritius Revenue Authority. 

23 July 2014

IMF: Mauritius The Drivers of Growth—Can the Past be Extended?

Mauritius’s economic performance has been called “the Mauritian miracle” and the “success of Africa” (Romer, 1992; Frankel, 2010; Stiglitz, 2011), despite difficult initial conditions that led a Nobel Prize Winner in economics to predict stagnation (Meade, 1961). We use growth accounting to analyze the sources of past growth and project potential ranges of growth through 2033. Growth averaged 4½ percent over the past 20 years. Our baseline suggests future growth rates around 3¼ percent, but growth could reach 4-5 percent with strong pro-active policies including (i) improving investment and savings rates; (ii) improving the efficiency of social spending and public enterprise reforms; (iii) investment in education and education reforms; (iii) labor market reforms; and (iv) further measures to reduce bottlenecks and increase productivity. With policies capable of generating 5 percent growth, Mauritius could reach high-income status in 2021, 4 years earlier than under the baseline.

Two Government of Mauritius Savings Bonds Issued today

Government is, as from today, issuing two Government of Mauritius Savings Bonds reserved for individuals namely,  - a five-year Government of Mauritius Savings Bonds at a fixed coupon rate of 6% per annum and a five-year Government of Mauritius Inflation Index-linked Savings Bonds at a fixed interest rate of 2% per annum plus the annual headline inflation rate.

This measure which follows the proposal of the Prime Minister, Minister of Finance and Economic Development, Dr Navinchandra Ramgoolam, is in line with the new focus on ensuring stability in the financial market and improving the monetary policy transmission mechanisms. At the same time, these issues will protect savers from the adverse impact of the current excess liquidity situation on their interest income.

The issue of these bonds is also deemed crucial at the macroeconomic level for the implementation of the Transformation Agenda outlined by Dr Ramgoolam with the triple overriding and interrelated objectives of attaining high income, inclusiveness and sustainability.

The key features underlying the two bond issues are as follows: an initial amount of Rs 2 billion which can be increased depending on the interest of individual investors and the excess liquidity situation; maximum investment ceiling of Rs 500 000 per individual to allow for a larger number of small savers to buy the bonds; interest rate at 6% per annum for the Bonds at fixed coupon and a fixed interest rate for the Inflation Index-Linked Bonds plus a full adjustment for the inflation rate.

Other conditions pertain to mainly: interest payment on a half yearly basis on the 31st January and 31st July; early redemption of the bonds only after two and a half years subject to a penalty fee on the interest amount; sale of bonds to be effected through commercial banks, the Mauritius Post Ltd and various post offices with a view to ensuring that sale is done in a maximum number of outlets and covers a larger number of individuals; and transferability of Bonds from one individual to another eligible individual that is those not already holding the maximum Rs 500,000 allowable of these Bonds.

The main objectives of this issue are to: promote the national savings culture; offer households, especially those who depend on interest income, a higher rate of interest on their lifelong savings; protect their interest income from inflation and earn a positive real return; and help mop up excess liquidity in the banking system which is causing interest rates on savings to fall to low levels.

This new issue of Government Bonds also reflects a more effective coordination between the Ministry of Finance and Economic Development and the Bank of Mauritius concerning monetary policy, with focus on addressing the problem of excess liquidity and improving the effectiveness of decisions taken on the Key Repo Rate.

22 July 2014

GlobalCapital: Mauritian bid to be African sukuk hotspot stacks up

Islamic bankers don’t need new excuses to travel to the world’s sunnier climes, but meetings in Mauritius next to its pristine coral sand beaches could soon become a feature of the market — and not just for obvious reasons.

21 July 2014

OECD releases full version of global standard for automatic exchange of information

Taking an important step towards greater transparency and putting an end to banking secrecy in tax matters, the OECD today released the full version of a new global standard for the exchange of information between jurisdictions.

The Standard for Automatic Exchange of Financial Account Information in Tax Matters calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis. The Standard, developed at the OECD under a mandate from the G20, endorsed by G20 Finance Ministers in February 2014, and approved by the OECD Council.

The Standard provides for annual automatic exchange between governments of financial account information, including balances, interest, dividends, and sales proceeds from financial assets, reported to governments by financial institutions and covering accounts held by individuals and entities, including trusts and foundations. The new consolidated version includes commentary and guidance for implementation by governments and financial institutions, detailed model agreements, as well as standards for harmonised technical and information technology solutions, notably a standard format and requirements for secure transmission of data.

“The G20 mandated the OECD to work with G20 and OECD countries and stakeholders toward the development of an ambitious information exchange model that would help governments fight tax fraud and tax evasion,” said OECD Secretary-General Angel Gurria. “Today’s launch moves us closer to a world in which tax cheats have nowhere left to hide.”

The OECD will formally present the Standard to G20 Finance Ministers at their next meeting in Cairns, Australia, on 20-21 September.  “Our message will be clear and simple: the automatic exchange of information standard is ready for implementation,” Mr Gurria said.

More than 65 countries and jurisdictions (see list below) have already publicly committed to implementation, while more than 40 have committed to a specific and ambitious timetable leading to the first automatic information exchanges in 2017. This includes a group of OECD and non-OECD countries which have adhered to the OECD Declaration on Automatic Exchange of Information in Tax Matters as well as a group of early adopters.

More jurisdictions are expected to commit to implement the Standard in the run up to the late-October meeting of the Global Forum Transparency and Exchange of Information for Tax Purposes on which brings together more than 120 countries and jurisdictions, to be held in Berlin and hosted by the German Ministry of Finance. At this occasion a signing ceremony is expected to be held for a new multilateral agreement that activates automatic exchange once legislation and other conditions are in place. Assistance will be available to support less developed countries, so they benefit from this move towards a more transparent tax environment, and international organisations are ready to co-operate to support these countries.

Even before the Standard has become operational, the drive toward greater transparency and better exchange of information is having a tangible effect on taxpayer behaviour. OECD analysis of voluntary disclosure programmes since 2009 shows that more than half a million taxpayers have voluntarily disclosed income and wealth hidden from their tax authorities. Countries have identified more than EUR 37 billion from voluntary disclosure programmes which OECD encourages countries to consider.

11 July 2014

Retraite à l'étranger : l'Ile Maurice, le paradis des plus aisés

Attention : passer une retraite dorée à l'île Maurice n'est pas accessible à tout le monde, les prix de l'immobilier étant finalement assez proches de ceux pratiqués en France. 

En savoir plus sur www.lexpress.fr

Farrer & Co: Is tax planning dead?

It's a hostile environment

Tax has become front page news in the UK.

First, the headlines focused on the so called "sweetheart" deals that large corporates had agreed with H.M. Revenue & Customs ("HMRC") in order to lower their corporation tax bills. Next, they revealed that several companies with a large presence in the UK are, in fact, paying little or no corporation tax due to cross border structuring. More recently, newspapers in and out of the UK have moved on to naming well known individuals and highlighting their involvement in tax avoidance schemes.  

At the same time, tax has been prioritised on political agendas.  Revenues need to be raised after a period of economic difficulty. In March 2011, the UK Government published a leaflet called "Tackling Tax Avoidance" in which it stated its intention to "plug the tax gap" (the gap between the amount of tax collected and the amount HMRC expected to collect which they estimated to be £40billion) to help raise some of the revenues that it needs.  It is clear from the leaflet that the UK Government considers both tax avoidance and tax evasion to be a problem that it intends to deal with.

Traditionally there has been a distinction between illegal tax evasion (deliberately understating tax liabilities) and tax avoidance (arranging your affairs to minimise tax liability within the legislation).  The headlines written by the media and the policies published by the UK Government seemingly erode this distinction.  For a tax adviser, the question is therefore whether the two concepts have become one.  If so, what is the future for tax planning?

What has changed?

The UK Government

True to the UK Government's word, recent budgets have been full of new anti-avoidance measures. Of particular note are: a new regime taxing UK residential property owned through a corporate envelope (and the latest budget reduces the definition of "high value" to £500,000 from April 2016); proposals for taxpayers to pay disputed tax upfront during disputes with HMRC; measures to allow HMRC to recover tax directly from taxpayer accounts (these are particularly controversial); and, importantly, the introduction of the general anti-abuse rule ("GAAR").

The intention behind GAAR was to produce an over-arching piece of legislation that swept up planning considered to be "abusive". Much has been written on the application of the "double reasonableness test" that GAAR applies to determine whether planning is abusive: 

"Tax arrangements are "abusive" if they are arrangements the entering into or carrying out of which cannot reasonably be regarded as a reasonable course of action…".

The test is meant to create a high threshold but it has instead been seen as creating uncertainty because it is so subjective. This has, however, forced tax advisers to be more cautious and before planning is effected the question must now always be asked: would the GAAR apply to this?

International policies

This is not just a UK problem. Modern technology has made it easier for corporates and individuals to structure their affairs across multiple countries. This has also allowed the corporate and the individual to take advantage of tax breaks offered by those countries - while taking on little of the tax burden. 

In response, there has been an increased drive by the OECD and the G20 to co-ordinate measures to combat international tax avoidance. Individual countries have already introduced automatic exchanges of tax information with other countries – our clients must now be aware that their tax affairs in one country will be shared with other countries. The next goal is greater transparency.  In particular, the European Parliament has proposed that there should be a public register of the beneficial ownership of companies and, if the latest proposals are successful, this register could be extended to include trusts (although this is particularly controversial).

Specific offshore evasion

In the UK, the Government intends to make use of the additional information it now has to target offshore tax evasion. The recent Budget contains proposals for a new strict liability criminal offence of failing to declare taxable offshore income - i.e. a person can be found guilty regardless of whether the person intended to commit the offence. In addition, it plans to introduce higher penalties of up to 200 per cent. of tax evaded. 

Taking shelter

So is tax planning dead? The answer - no, but the old way of thinking about it is. 

The most recent high profile case in the UK was a judgment in a tax tribunal case – it made headlines because a well-known radio presenter was named in the judgment. The arrangements put in place generated significant tax losses under the guise of creating a trade in used cars for a number of individuals. In each case, the turnover from the so-called "trade" was very low (and in some cases, nil) but the individual incurred significant losses which were offset against their income tax liability for the year. As an example, in one case turnover was £9,513 but the loss created was £14,500,192!

Although the case has raised headlines in the UK, is there much to be feared by it and others like it?  Perhaps not. The judgment did decide that the scheme failed in its entirety. However, the judgment makes it clear that it failed because the losses were considered to be contrived and because the arrangements lacked substance and commerciality. They were also entirely artificial – the individuals involved had no intention to set up a used car business, little, if no, involvement in any trading that did happen and they were open about this in their statements.

This case is certainly support for the proposition that highly artificial arrangements no longer work but then, to us, this is not surprising. For some years now, we have advised our clients against using highly artificial schemes that are rolled out to multiple investors. Instead our focus has been, and will continue to be, on putting in place bespoke solutions that are tailored to the client's circumstances and, importantly, to what the client wants to achieve.

And there is no suggestion that this type of bespoke planning is off the table despite the change in political atmosphere and the increase in anti-avoidance legislation. In fact, in a recent HMRC publication entitled "Tempted by Tax Avoidance" HMRC state that an individual is entitled to plan their tax affairs in a way that makes sure they do not pay more tax than they have to – echoing the famous judgment of Lord Tomlin in the Duke of Westminster case in 1936 when he said "…every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate acts is less than it otherwise would be…".

This is therefore where the future of tax planning lies: in using the legislation to structure an individual's affairs in the way the legislation intended.  For example, no matter what the media headlines may say, the UK's non-domicile rules are not loopholes but incentives put in place to encourage individuals to come to the UK.  They have been discussed and debated and they are deliberately generous.  Individuals are entitled to take advantage of them and should continue to do so - careful planning can still maximise the advantages an individual receives.

Is there anything the client can do?

Clients do need to be aware that some planning is now seen as high risk, in particular that which is artificial and has little commercial reality.  But can clients tell the difference between, on the one hand, a scheme which is high risk and, on the other hand, planning which structures their affairs so that they do not pay more tax than they have to?
  1. Clients should ask themselves whether they are comfortable with the arrangement they are entering into. A question we often ask is would they feel comfortable if their parents, family or friends knew about the arrangements they had entered into?
  2. Clients also need to consider the potential ramifications of unwanted press attention and the effect on their professional reputation. For example, Gary Barlow, a member of the well-known boy band, Take That, is currently facing calls to hand back his OBE (an honour that recognised his contribution for services to music and charity) over press claims that he has been involved in tax avoidance schemes.
  3. Clients' advisers should ask another simple question, do the arrangements stack up? Is the arrangement just being put in place on paper or is it being put in place in practice? If just on paper, the client should be wary.
  4. Clients should consider, with the help of advisers if appropriate, whether the effect of the planning is in line with the intention of the legislation i.e. did Parliament broadly intend for the planned outcome or is the outcome arrived at through a highly contrived reading of the legislation?
  5. Clients should also consider the long term practicality of the arrangements. Is it possible to unwind structures being put in place now if there are future changes to legislation? Can money be extracted if they want to exit the arrangement? What if partners die or disagree on the future of the arrangements?
  6. Does the client have a team around them? Clients can put themselves in a good position by surrounding themselves with advisers they trust and who can give a view on the whether any proposed planning carries significant risks.

Conclusion

In summary, we do not think tax planning is dead. In fact we believe it is alive and well.  However, our clients must be aware that public opinion and government legislation are increasingly hostile to aggressive tax planning. So now, more than ever, it is important that clients take detailed, considered advice before putting any planning in place and also that they exercise their own judgement as to whether the planning is commercial, appropriate and fit for the long term.

09 July 2014

Participation of the FSC Mauritius at the World Pension Summit ‘Africa Special’

FSC Mauritius is taking part in the World Pension Summit Africa Special in Abuja Nigeria this week with the Chief Executive, Ms Clairette Ah‐Hen, speaking in the first panel on “Africa Regulatory Dialogue”.

The role of the pensions industry in providing a stable consumer savings vehicle and the investment of capital from pension funds have become increasingly important in today’s evolving business environment.

The conference, organised on 7‐8 July in Abuja, is part of a wider series of world class events – World Pension Summits ‐ attracting pension professional delegates from around the African Continent ‐ including government representatives, pension regulatory authorities, policy makers and leading pension industry figures from Nigeria.

The event is jointly organised by the National Pension Commission (PenCom) of Nigeria and the World Pension Summit and marks the 10th anniversary of pension reforms in Nigeria.

Among the highlights of the summit, the plenary session on “Africa Regulatory Dialogue” with the participation of African pension regulators, where the growing importance of effective regulation in pension systems was discussed.

Intervening as panelist for this session, the FSC Chief Executive said: “It is important to think in terms of several pillars of retirement provision rather than focus exclusively on just one pillar”. She also mentioned that “All pensions systems have embedded risks that must be understood and managed”.

Reforms and responding to needs of present and future pensioners is important and is an on‐going process.

Addressing participants at the summit, Nigerian President Ebele Goodluck Jonathan said: “It is imperative that stakeholders in this life shaping‐industry engage constantly in dialogues to bolster management frameworks and practices in their respective jurisdictions.

Discussions at the summit focused precisely on this need to encourage dialogue among all stakeholders on opportunities that exist for access to pensions. The importance of protecting those reaching retirement through adequate safeguards and lessened risks was highlighted as well as the specific nature of pension funds and the need for social pensions for poverty alleviation.

07 July 2014

Bedell: Kristian Wilson looks at the rationale and use of offshore jurisdictions in the People's Republic of China

In 2013, inflows of foreign direct investment (“FDI”) to the People’s Republic of China (“PRC”) amounted to US$127 billion, making the PRC the world’s second largest recipient of inward FDI after the United States. Slightly behind the PRC were the British Virgin Islands (“BVI”) which had received FDI inflows of US$92 billion, making the BVI fourth in the world. It is noteworthy that not only are the PRC and the BVI among the top four recipients of FDI, there is also a strong relationship between the two jurisdictions in terms of FDI flows. For instance, the BVI is frequently cited as one of the top three sources of FDI into the PRC (together with the Cayman Islands (“Cayman”) and Hong Kong). In 2010, the BVI was the second-largest investor in the PRC, providing US$10.4 billion (9.1%) of total inward FDI into the PRC.

The question then arises as to why a small island located in the Caribbean should be both a significant recipient of global FDI and a leading contributor of FDI into the PRC. This paper will look at the reasons behind this phenomenon, by examining the role of the BVI in structuring inward investment into the PRC and considering how the BVI is used to structure outward investment by PRC enterprises. This paper will also consider other offshore jurisdictions, as well as the role of Hong Kong and Macau (which are often considered to be quasi-offshore jurisdictions) in Chinese FDI.

This article will focus on the use of offshore jurisdictions from a legal perspective and consider the interplay of offshore structures with PRC law. This paper is divided into seven parts. Part I provides an overall introduction. Part II examines key definitions and perspectives. Part III looks at the economic development of the PRC and the context in which the use of offshore structures has emerged. Part IV looks at how offshore structures are used to finance PRC enterprises. Part V looks at how offshore jurisdictions have been used by PRC enterprises to structure their outward investment. Part VI will look at the future role of offshore jurisdictions in the PRC. Lastly, Part VII will make some concluding remarks.

Originally published in Tsinghua China Law Review, 6TSINGHUA CHINA L. REV. (2014). Please click here to read the full article.

The Mauritian Dream: 7 Good Reasons to Invest in Mauritius

Mauritius has built up a solid reputation as an investment hub, reliable and safe in terms of good governance as well as ethical, economic and political transparency. This little country, which combines a lively feeling for business with an attractive lifestyle, has achieved one of the fastest growth rates in sub-Saharan Africa.

There are so many good reasons to invest there. Below are seven of them, summing up the powerful attraction of the Switzerland of the Indian Ocean.

1. A very favorable taxation system

Mauritius has adopted a low rate of taxation to encourage the setting up of local and foreign companies:
  • No inheritance tax
  • Tax credits of 80% for offshore companies
  • 15% tax on company profits and personal income
  • Value-Added Tax at 15% (refundable)
  • No tax on dividend
  • No customs duties or VAT on equipment
2. Durable Political and Social stability

Since its independence in 1968, Mauritius has enjoyed real political stability. Its government is democratically elected every five years. The political structure is based on the British parliamentary model, following the principle of the separation of  powers, legislature, executive and judiciary, under the vigilant eye of the "fourth power", a free press.

3. An Economy based on free trade

The  dynamism  which  has  put Mauritius into second place among middle-income African countries is the result of sustained and efficient economic management based on the principle of free trade which is embraced by the political class, the business community and the local population as a whole, for whom the protection of foreign investors has always been a priority. The Index of Economic Freedom, published annually by the Wall Street Journal and the Heritage Foundation puts Mauritius in 8th place in 2013 among countries where economic freedom prevails, ahead of the United States, Great Britain, Japan, Germany and France. The spearhead of these facilities, the Board of Investment, takes its advisory role very seriously, deals rapidly with dossiers and makes it possible for an economic activity to start in three days!

4. Protection of assets and Double Taxation treaties

The country has signed up to several multi-lateral treaties and conventions that guarantee the protection of investors. A  member  of  COMESA  (Common Market  for  Eastern  and  Southern  Africa), SADC (Southern African Development Community) and the IOC (Indian Ocean Commission), Mauritius has also signed 37 double-taxation avoidance agreements, which facilitate movement of capital, transfers of assets, inheritances etc.

5. A qualified workforce

The literacy rate in the country is over 80% and because of their history, Mauritians are bilingual in English and French. The population is composed of educated young people and qualified professionals, multi-skilled and always on the look-out for training possibilities. Many Mauritians go on after obtaining local qualifications from the University of Mauritius or the University of Technology to study at foreign universities.

6. A Strategic Geographical position

Thanks to its position in the Indian Ocean, Mauritius is today a hub for commerce, investment and  tourism, connecting Africa, India and Asia with the rest of the world. In a convenient time zone (GMT+4), the country is a commercial and financial center which is open for business before the markets in the Far East close and after those of the United States open.

7. Free zones / Free port

Launched in 1992, the Mauritius Freeport is a free-trade hub for products destined to be re-exported. The government's aim is to make the country into a logistical and regional zone for stockage, distribution and commerce, serving East Africa, South Africa and Indian Ocean countries. Those operating in the Mauritius Freeport are exempted from tax on company profits. At the end of 2012, 254 companies were active in sectors such as re-export, transshipment of containers and assembling goods. The government acts as a business facilitator in most sectors and as a regulator for a small number of specific activities. In the port area, a special counter has been opened, in order to speed up the delivery of the required permits.

Offshore Investment (July/August 2014): Reforming the world – OFCs lead the charge

Governments are extending their tentacles into more and more aspects of people’s lives. As professionals in Offshore Financial Centres know all too well, they are undermining long traditions of banking privacy with international data sharing agreements. Lawyers and accountants are increasingly forced to reveal details of clients’ activities to public officials. And perhaps most worrying of all, states are engaged in the mass surveillance of their citizens, monitoring all manner of activity from e-mails and phone calls to financial transactions. 

Dr Richard Wellings details why OFCs must resist bullying tactics from the US and EU and seek to retain their long-held traditions of respect for private property and financial privacy.

03 July 2014

STEP: Family's claim against Jersey trust company is ruled within time limit

Jersey's Royal Court has ordered the financial and trust services group Minerva to pay GBP11.5 million in damages to the Nolan family.

The 13 family members lost large sums through fraudulent investments they were induced to make by one Gerard Walsh, a former client of one of Minerva's predecessor companies, PTCL. The family alleged that PTCL had dishonestly assisted Walsh by helping him transfer the Nolan's investments to other accounts, some of them available for him to spend for his own use. The basis of the dishonest assistance claim was thus a fraud giving rise to a constructive trust.

Minerva took over PTCL in 2007, after the Nolan incidents had occurred. Its main defence to their suit was that the claims were time-barred, because they should have been made within the usual tort claim limitation period of three years of the family becoming aware of their losses. The Nolans had argued that a claim in dishonest assistance was either not time-barred at all, or only time-barred after ten years.

In a complex judgment just published, the Jersey Royal Court accepted Minerva's assertion of a three-year time limit. But in fact it decided the case in the Nolans' favour.

It reasoned that, although the Nolans knew by January 2008 that they had lost the money which they had invested, they only discovered the role played by PTCL in 2010, when Minerva was forced by injunction to yield up the relevant documents to them. 'We conclude, therefore, that it was not until 2010 that the Nolan family acquired knowledge of all the facts necessary to found an action in dishonest assistance', said the court (Nolan & Ors v Minerva Trust Company Limited and Ors (2014 JRC078A).

The Jersey doctrine of empêchement de fait states that prescription is suspended while it is practically impossible for the plaintiff to bring an action. The clock in the Nolan case therefore did not start until they were in possession of documents sufficient to be able to plead an allegation of fraud or dishonesty. The family launched their action well within three years of receiving the injuncted documents and thus their action was not time-barred.


01 July 2014

IFC Review: Technology, Globalisation and a Level Playing Field

With the movement of capital becoming ever easier, Gonzalo Jalles examines how the increased and often one-sided regulation this brings is detrimental to the running of a competitive financial system.

IFC Review: A Rewrite of New Zealand’s Capital Markets Law

Penny Sheerin highlights the 'once in a generation' reform of the New Zealand capital markets system following the enactment of the New Zealand Capital Markets Law.

IFC Review - Beware of the ‘Blue Vase’ Syndrome: Trends in Trust Litigation

Shan Warnock Smith highlights recent trends in Trust litigation while highlighting the dangers of 'Blue Vase' syndrome.

IFC Review - Due Diligence: Red Flags On Investment Schemes

In this month's column, Burke Files shares what he considers some of the most obvious red flags to avoid when it comes in to making an investment.

Mauritius: Financial Secretary holds meeting of the Financial Services Consultative Council


The Ministry of Finance and Economic Development held of the Financial Services Consultative Council (FSCC) yesterday in Port Louis under the Chairmanship of the Financial Secretary, Mr Dev Manraj. The meeting follows the announcement made by the Prime Minister, Dr. Navinchandra Ramgoolam, at the annual dinner of the Mauritius Chamber of Commerce and Industry last week, regarding the need to bring reforms and consolidate the various sectors of the economy, including the financial services sector, and to move to a new threshold of development.
 
Stakeholders present at the meeting were namely, the Bank of Mauritius, the Financial Services Commission, the Board of Investment, the Mauritius Revenue Authority, the Stock Exchange of Mauritius Ltd, the Insurers’ Association, the Mauritius Bankers’ Association, Global Finance Mauritius and the Association of Trusts and Management Companies.
 
As provided under the Financial Services Act, the Financial Services Consultative Council acts as a think-tank and serves as a platform for discussing the latest concepts and international trends in the field of financial services and global business and formulates suggestions and ideas for the development of the financial services and global business sectors.
 
Discussions at the meeting centered on a number of initiatives including: The implementation of the Report “A Roadmap for the Financial Services Industry” by Mr Percy Mistry; Global Communication and Messaging Strategy for the Mauritius Financial Centre; and Product Development.
 
Similar to the FSCC meeting, the Ministry of Finance and Economic Development proposes to hold a series of consultative meetings with stakeholders of the different sectors of the economy namely agriculture, tourism, manufacturing, services, etc. The objective of these meetings is to reach a consensus on major policy orientation for incorporation in the 2015 budget.

Mauritius: Minimum Stated Unimpaired Capital for CIS Managers

The FSC Mauritius wishes to draw the attention of its licensees on compliance with the requirement to maintain a minimum stated unimpaired capital as prescribed under Regulation 38(1) of the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008. The Regulations provides that a CIS Manager shall maintain a minimum stated unimpaired capital of at least MUR 1 million or equivalent amount. While reviewing the audited and interim financial statements, the FSC Mauritius came across two major issues regarding minimum stated unimpaired capital. 
  • The stated capital was actually below the minimum requirement due to accumulated losses. 
The FSC has established that the minimum stated unimpaired capital should be interpreted as "stated capital plus revenue reserves", i.e. stated capital plus retained earnings. 

It has also been clarified that the stated capital should be fully paid while determining whether the minimum stated unimpaired capital has been met. 

Furthermore, to 'maintain' a minimum stated unimpaired capital of at least MUR 1 million or equivalent amount implies that the minimum requirement should be met at all times. 

  • In many cases, the financial statements showed that loans which had no contractual obligation are being treated as equity instruments.   As such, although the shareholders' fund is more that MUR 1 million, the stated capital plus retained earnings is less than MUR 1 million.
In such cases, licensees are not in compliance with the requirement of Regulation 38(1) and necessary steps should be taken to meet the above definition of minimum stated unimpaired capital.

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