Baker & McKenzie: India's renegotiation of tax treaties favors Dutch investments

Due to the renegotiations of a number of tax treaties, the Netherlands has suddenly become the top jurisdiction for foreign investors looking to invest in India. The Netherlands now holds the unique status of being the only major investor into India where shareholders in Indian companies are not subject to tax on a disposal of their shares, neither in India (based on the tax treaty), nor in the Netherlands (due to the participation exemption). 

Tax Alert

KPMG: The profitability of EU banks – Hard work or a lost cause?

The low profitability of many European banks has become a constant feature since the financial crisis. Low profitability among European banks reflects a range of factors that vary across countries and across banks, including the weak economic environment in Europe, stubbornly low net interest margins, high levels of non‑performing loans, high cost to income ratios, the impact of regulatory reform, and – for some banks – a business model that relied too heavily on the good times continuing without serious interruption.

This paper analyses five drivers of bank profitability and their combined impact on banks and the overall economy.

FSC Mauritius issues communiqué - The Insurance (Risk Management) Rules 2016

Pursuant to its powers under section 130 of the Insurance Act 2005, the Financial Services Commission (‘FSC’) has issued the Insurance (Risk Management) Rules 2016 (the ‘Rules’).

In line with the FSC’s vision “to be an internationally recognized Financial Supervisor committed to the sustained development of Mauritius as a sound and competitive Financial Services Centre”, the Rules will set a new culture for our licensed insurers in terms of Risk Management.

The Rules are applicable to all insurers as defined under the Insurance Act and all insurers will be required to maintain, at all times, a Risk Management Framework (‘RMF’) to enable them to develop and implement strategies, policies, procedures and controls to manage material risks.

The Rules aim to enhance the observance of the International Association of Insurance Supervisors’ (‘IAIS’) core principle 16 (‘ICP 16’): ‘Enterprise Risk Management for Solvency Purposes’.

In addition to observing compliance with ICP 16, the objectives of the Rules are to:

(a) deliver a better managed insurance sector with a focus on risk by encouraging sounder risk management and risk assessment in the insurance sector. As a consequence, insurers would be able to seek more economically aligned strategies and pricing on both their liability and asset sides of their balance sheets, making the insurance sector more efficient, and at the same time, more viable and financially sound;

(b) empower the FSC to be better placed to oversee the risk assessment and supervision of the sector and have improved scope for intervention in a measured and credible way;

(c) enhance the reputation and potential for Mauritius to develop its financial services sector in line with the Commission’s vision and the government’s objectives.

Insurers are required to have in place a Risk Management Function (‘RMF’), pursuant to Rule 12 of the Rules, as from 01 January 2017. The RMF includes the appointment of a risk officer who shall be a person of sufficiently senior status, suitably qualified and experienced.

The other provisions of the Rules will be effective as from 01 July 2017.

Financial Services Commission, Mauritius

31 October 2016

Mauritius: Overseas Family Office

The Minister of Financial Services, Good Governance and Institutional Reforms will be making regulations under the Financial Services Act to provide for the inclusion of the Overseas Family Office (Single) and the Overseas Family Office (Multiple) in the Second Schedule to the Act with a view to allowing Overseas Family Corporations to set up a base in Mauritius as announced in Budget Speech 2016-2017.

The Overseas Family Offices constitute new lines of financial offerings targeting at investment advice, such as budgeting, insurance, charitable trusts, family-owned businesses, wealth transfer, and tax services.  The Financial Services Commission would, thereafter, issue Rules to regulate the activities of the Overseas Family Offices.

Communique: FSC Mauritius issues the Draft Securities (Preferential Offer) Rules for consultation

The Financial Services Commission, Mauritius (the “Commission”) is in the process of issuing the Securities (Preferential Offer) Rules (‘Preferential Offer Rules’).

In line with its rule-making process, the Commission is seeking views and comments from the industry and the public on the proposed set of Rules. Currently, there are no Rules for private placement referred to in section 2 of the Securities Act.

The main objective of the Preferential Offer Rules is to regulate preferential offers including private placements. The draft Preferential Offer Rules can be consulted at Draft Securities (Preferential Offer) Rules 26 10 16.docx.

Your views and comments should be submitted by email no later than 4 November 2016 on prefconsult@fscmauritius.org

Financial Services Commission, Mauritius

26 October 2016

World Bank: Doing Business 2017 - Equal Opportunity for All

Doing Business 2017: Equal Opportunity for All, a World Bank Group flagship publication, is the 14th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies—from Afghanistan to Zimbabwe—and over time.

Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures labor market regulation, which is not included in this year’s ranking.

Data in Doing Business 2017 are current as of June 1, 2016. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why. 

Main Findings

• Doing Business 2017: Equal Opportunity for All finds that entrepreneurs in 137 economies saw improvements in their local regulatory framework last year. Between June 2015 and June 2016, the report, which measures 190 economies worldwide, documented 283 business reforms. Reforms reducing the complexity and cost of regulatory processes in the area of starting a business were the most common in 2015/16, as in the previous year. The next most common reforms were in the areas of paying taxes, getting credit and trading across borders.Read about business reforms.
• Brunei Darussalam, Kazakhstan, Kenya, Belarus, Indonesia, Serbia, Georgia, Pakistan, the United Arab Emirates, and Bahrain were the most improved economies in 2015/16 in areas tracked by Doing Business. Together, these 10 top improvers implemented 48 regulatory reforms making it easier to do business.
• Economies in all regions are implementing reforms easing the process of doing business, but Europe and Central Asia continues to be the region with the highest share of economies implementing at least one reform—96% of economies in the region have implemented at least one business regulatory reform.
• Doing Business includes a gender dimension in four of the 11 topics sets. Starting a business, registering property and enforcing contracts present a gender dimension for the first time this year. Labor market regulation already captured gender disaggregated data in last year’s report.
• This year’s report expands the paying taxes topic set to cover postfiling processes—what happens after a firm pays taxes—such as tax refunds, tax audits and administrative tax appeals.
• This year’s report also includes an annex with analysis on a pilot indicator on public procurement regulations.
• The report features six case studies in the areas of getting electricity, getting credit: legal rights, getting credit: credit information, protecting minority investors, paying taxes and trading across borders as well as two annexes in the areas of labor market regulation and selling to the government. The case studies and annexes either present new indicators or provide further insights from the data collected through methodology changes implemented in the past two years. See all case studies.

FSC Mauritius issues Public Notice – Suspension of CIS Manager Licence and the Investment Adviser (Unrestricted) Licence of Belvedere Fund Manager Limited

FSC Mauritius issues Public Notice - Suspension of CIS Manager Licence and the Investment Adviser (Unrestricted) Licence of Belvedere Fund Manager Limited

FBI: Combating the Growing Money Laundering Threat

Every year, more than $1.5 billion in concealed transactions are purposefully moved around the globe. And about 20 percent of the hidden and illicit transfers occur in the United States, according to a U.S. Department of the Treasury report on money laundering and terrorist financing threats.

Transnational criminal organizations, foreign intelligence services, and terrorist groups—as well as Internet fraudsters and other criminals—move billions of dollars each year through the international banking system and across borders to conceal the origin of the funds. To more effectively address the threat, the FBI has placed a renewed emphasis on investigations that target the middlemen who facilitate the hidden flow of cash.

“Our focus is on third-party facilitators,” said James Barnacle, who heads the FBI’s Money Laundering Unit. “They include, among others, lawyers, accountants, and brokers with the ability to facilitate the process of moving money for dangerous criminal organizations. That’s who our targets are.”

The facilitators use traditional and non-traditional means to launder staggering amounts of illicit proceeds every year. Barnacle said business e-mail compromise, or BEC, scams and the use of virtual currencies are on the rise

To help combat this growing threat, the FBI has been adding resources to its Money Laundering Unit in the Criminal Investigative Division. The team has been intensifying its efforts to support existing investigations and to identify and investigate previously unknown facilitators. It works alongside other Bureau divisions, including Counterintelligence and Cyber, to analyze criminal networks and to disrupt their operations. The team also provides guidance and training and works with domestic and foreign law enforcement partners to develop initiatives that support investigations in the FBI’s 56 field offices.

Innovations in technology have made it easier for launderers to communicate anonymously and move money, making it more challenging to identify, investigate, and prosecute launderers, who shield a staggering amount of money in their varied illegal transactions. These types of crimes often come to light through tips from within the private sector or the general public.

“One of the tools we use to combat money laundering is the Internet Crime Complaint Center website, or IC3.gov,” said Barnacle. “We encourage victims of fraud to submit a report on the IC3.gov site as soon as possible. It’s a tremendous asset for our team.”

One of the Money Laundering Unit’s most critical partnerships is with the private sector, where financial institutions face significant risks and are required to have robust anti-money laundering policies and procedures.

“The relationship we have with private industry is just as important as the partnerships we have with other government agencies and regulators,” said Barnacle. “Our mission would not succeed without our partnership with the private sector.”

Mauritius Times: The Persistent Low-Interest Rate Regime Carries Serious Risks

The former Governor of the Bank of Mauritius (BoM), Mr Rundheersing Bheenick, protested strongly each time the BoM’s Monetary Policy Committee overruled him by deciding to again and again bring down the bank’s Key Repo Rate by a majority. He even clashed with Ministers of Finance who advocated a private sector agenda to keep bringing down the country’s structure of interest rates on the assumption that it was interest rates that were supposedly preventing the private sector from undertaking further investment.

Mauritius Times

Overseas Diversification Minimizes Risk, But Requires Increased Knowledge of Compliance, Taxation, and Regulatory Issues

Chinese high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals are increasingly looking for greater diversification, protection and portfolio growth as they become more financially sophisticated, according to new research from Jersey Finance.

The report, “The Internationalisation of Chinese Wealth – 2016” is based on proprietary research conducted by Jersey Finance, the body which promotes the jurisdiction as a robust, transparent, financial centre, and Hubbis, a provider of events and content for Asia's Wealth Management community, from interviews with industry representatives. The white paper examines the driving forces behind Chinese investors’ increasing appetite for foreign investment, and the risks and challenges they must prepare for in doing so.

The research involved the views of over 50 practitioners working in the wealth management industry in either Hong Kong and Singapore. These included wealth professionals at private banks, trust and fiduciary services providers, tax consultants, law firms and other professional services firms.

The white paper identified estate and inheritance taxes, along with the global drive towards tax transparency, as being among the biggest and most pressing risks for Chinese HNW and UHNW individuals.  According to the report, Chinese individuals also see overseas investments as a way to achieve higher returns through access to a broader selection of products and services than would be available domestically.

The key findings of this white paper include:

• The primary needs of China’s HNW and UHNW individuals are to diversify and protect their assets in an increasingly complex world, and to establish proper succession planning for family businesses and to protect their personal wealth
• While China’s HNW and UHNW individuals prefer to take a predominantly active role in their own investments, the broader selection of products and services available has led to commensurate demand for wealth management services.
• The management of overseas wealth presents new challenges for investors. The implications of regulations, including the Organisation for Economic Co-operation and Development’s Common Reporting Standard is still not fully understood by Chinese investors
• Maintaining compliant structures in an increasingly transparent and compliance-driven world is ever more challenging and more important

Richard Corrigan, Interim Director of Financial Services for the Government of Jersey said: “As China’s HNW and UHNW take an increasingly active role in their own investments, there are signs that more of them are entrusting a larger share to wealth professionals, both domestically and through international finance centres (IFCs), especially in the current volatile environment. We believe there is a stronger need for first-class IFCs and financial practitioners to provide a full suite of wealth management services – including estate and wealth planning, corporate finance and real estate to serve the needs of Chinese wealthy individuals.”

The complete findings, which include insights into structuring solutions, tax-related risks, gateways to Chinese wealth and more, can be found in the "The Internationalisation of Chinese Wealth – 2016”.

Mauritius Times: Politics of Disorientation

In the past couple of weeks, it seemed that serious differences of appreciation of the Heritage City project were keeping apart the Prime Minister and the Minister of Finance. Differences appear to have been evened out lately when the Minister of Finance was given the responsibility to steer an alternative administrative city project. It is not certain, though, that the division created within the ranks of the government between the chief advocate of the Heritage City project, Roshi Bhadain, on the one side, and other senior members of the government, on the other, is over yet.

Mauritius Times

Mauritius: The Financial Services Commission is inviting applications from high calibre professionals

The Commission is inviting applications from high calibre professionals for the following positions:

(1) Director - Licensing (Ref: Dir/Lic/Oct16)

(2) Director - Financial Stability (Ref: Dir/FS/Oct16)

(3) Director - Supervision (Ref: Dir/Sup/Oct16)

(4) Head - Human Resources (Executive Level) (Ref: Exe/Head-HR/Oct16)

(5) Economists (Manager Level) (Ref: Mgr/Eco/Oct16)

(6) Actuaries (Manager Level) (Ref: Mgr/Act/Oct16)

Career section

Insurers and reinsurers launch Blockchain initiative B3i

Blockchain offers huge potential for enabling digital contracts and transactions amongst multiple parties to be executed in a secure, transparent and auditable way. By establishing trusted relationships among all participants, Blockchain has the potential to provide a consistent, automatic contract execution environment where transactions and contracts are stored on a shared ledger, thus reducing the administrative workload of multiple stakeholders to ensure contract consistency and execution.

The Blockchain technology can only reach its full potential for stakeholders if implemented in a consistent and compatible way, based on minimum standards to exchange data and transactions via Blockchain. Therefore Aegon, Allianz, Munich Re, Swiss Re and Zurich have agreed to cooperate for a pilot project, using anonymized transaction information and anonymized quantitative data, in order to achieve a proof-of-concept for inter-group retrocessions by the use of the Blockchain technology. With this feasibility study, the founding members aim to explore whether Blockchain technology can be used to develop standards and processes for industry-wide usage and to catalyze efficiency gains in the insurance industry.

Harald Rosenberger, Head of Innovation at Munich Re says: “Blockchain technology shows most of its potential only if it’s applied in a network of peers. Therefore we see a huge benefit for the insurance industry in doing this together in the Blockchain Insurance Industry Initiative B3i. With B3i we are in the position to explore and shape the future use of Blockchain and to set the necessary standards for a true digitalization of insurance.”

The Blockchain Insurance Industry Initiative B3i will allow insurers and reinsurers to get a better insight into the applicability of the Blockchain technology in the insurance market. In addition, B3i offers a platform to exchange insights regarding Blockchain and potentially other technologies, use case experiments and research information.

This initiative aims to facilitate the transition from individual company use cases to viable solutions across the entire insurance value chain. Such future development of a modern and efficient handling of insurance transactions will require common standards and procedures. Consequently, the Blockchain Insurance Industry Initiative B3i is open to other insurers and reinsurers. Its ultimate ambition is to assess how Blockchain technology can be established as a viable tool for the insurance industry in general and for insurance clients in particular.

ICAEW Economic Insight: Africa

The ICAEW Economic Insight: Africa, is a quarterly economic forecast for the region prepared directly for the finance profession. Produced with Oxford Economics, ICAEW’s partner, one of the world’s foremost advisory firms. Their analytical tools provide unparalleled ability to forecast economic trends. It provides a unique perspective on the prospects for Africa as a whole and for its individual economies against the international economic background.

Economic Insight: Africa

FSC Mauritius issues Circular Letter (CL181016) on GBC 2 trading on Securities Exchange in Mauritius

Mauritius Times: Policy Drivers & Ill-Advised Faux-Pas

Heritage City was to be the shining marvel at no costs to Mauritian taxpayers, the vanguard of new horizons, a dearly cherished legacy to the nation. On the strength of the PM's personal publicly repeated attachment to the project, dissenting concerns, however troubling, not just from Opposition forces but from numerous sensible quarters, could be cavalierly dismissed. The empowered twin team of Ministers Bhadain and Soodhun industriously led the charge. Cabinet duly went along for much of last year and the High-Powered Committee seems to have been comfortable at all vetting stages. A special Cabinet meeting considered presentations by Stree Consulting around July and diligently approved again. Until the “remise en cause” one week later by the Minister of Finance himself, reversing that collective decision and placing the PM squarely in minority, a momentous occurrence in SAJ's long and illustrious career.

Mauritius Times

Mauritius Times: Heritage City, again

High politics is the art of compromise, seeking middle ground and moving away from sterile controversies. The storm-in-a-teacup outcome from the extensive debate about the 'Heritage City' project may after all serve as an honourable exit for the different protagonists involved in a project otherwise deserving but that actually ended up showing some darker sides of politicians.

Mauritius Times

Change of British High Commissioner to Mauritius

Mr Keith Allan has been appointed British High Commissioner to Mauritius in succession to Mr Jonathan Drew MBE, who will be transferring to another Diplomatic Service appointment. Mr Allan will take up his appointment in August 2017.

Convergys to Open its First Customer Service Center in Mauritius

Convergys announced plans to open its first customer service center in Mauritius, early in 2017. By opening up a new site in Mauritius, a French and English-speaking nation, this further strengthens Convergys’ SMART shoring proposition for French clients, as well as Canadian companies and multi-nationals who need a French language or bilingual customer service solution delivered from a single low cost location.

Following the recent acquisition of buw in Germany, this investment further demonstrates the company’s ambition to grow in Europe and in particular, in France, the 3rd largest BPO market in EMEA.

Convergys is the first major BPO provider to enter Mauritius, and this new site is expected to create 600 jobs.

Rémy Béal, Group VP Operations EMEA says “With the creation of a ‘long-shore’ destination, this new centre will complement our longstanding presence in Africa, alongside Tunisia and Egypt, where the company has long established reputations for delivering excellent customer service.”

“We are excited to enter Mauritius and will share additional details in the coming weeks and months, including location and hiring information.” Béal added.

Ken Poonoosamy, Director General of Board of Investment of Mauritius adds “We are happy that Convergys has chosen to locate its centre in Mauritius. As the apex investment promotion agency, we are pleased that BOI has played an instrumental role in convincing and facilitating its entry in the country. We have no doubt that the presence of Convergys shall further enhance the Mauritian ICT landscape and shall also open up an array of opportunities for Mauritius. The choice of Convergys for Mauritius is definitely a sign of confidence that Mauritius is really the place to be for companies wishing to tap into emerging markets”

Sustainability of Offshore: using Cayman for investment into Africa

The use of offshore is an integral part of African financing. Offshore vehicles are used for a variety of structures for African financing, including bond issuances, listing, loan financing, JVs and PE structures. Investors in and out of Africa have an appetite for using offshore in various transactions because they understand the benefits of structuring transactions, in particular through Cayman Islands vehicles. This need for offshore and the realisation that offshore vehicles are an attractive conduit for foreign direct investment into Africa (FDI) has prompted a few African countries including Mauritius, Seychelles, Ghana, Liberia and Botswana to attempt to mirror the success of Cayman by establishing themselves as International Financial Centres (IFCs). However, as a result of its modern courts system, compliance culture and adherence to international standards in terms of tax transparency Cayman remains a go-to jurisdiction for investment into Africa.

Mo Ibrahim Index 2016: Mauritius, ranking country in overall governance in Africa

Mauritius remains the top ranking country in overall governance in Africa for the tenth consecutive year says Mo Ibrahim Index of African Governance (IIAG) 2016 entitled: A decade of African Governance 2006-2015, which was released on 3rd October 2016 in London.

With a total score of 79.9 points, Mauritius ranks first in Africa followed by Botswana with 73.7 points and Cape Verde with 73 points at the second and third position respectively.

Among the 54 countries rated by the Foundation, Mauritius scored the highest overall points with the average score for the continent being 50.1 and Southern Africa remaining the best performing region, with an average score of 58.3. In total, 37 countries have shown improvement in Overall Governance since 2006, representing 70% of African citizens.

The 10th edition of the IIAG, which is considered as the most comprehensive analysis of African governance undertaken to date, brings together a decade of data to assess each of the 54 Africa countries against 95 indicators drawn from 34 independent sources. This year, for the first time, the IIAG includes Public Attitude Survey data from Afrobarometer. This captures Africans’ own perceptions of governance, which provide fresh perspective on the results registered by other data such expert assessment and official data.

IIAG 2016 further observes that Southern Africa has shown average improvement in all categories except Safety & Rule of Law where it shows a slight deterioration of -1.6 score points as well as a decline in accountability by -4.0 score points since 2006 therefore attributing it as the main driver behind the decline in score in Safety & Rule of Law.

According to the Chair of the Mo Ibrahim Foundation, improvement in overall governance in Africa over the last decade reflects a positive trend in a majority of countries and for over two-thirds of the continent’s citizens.

Mo Ibrahim Index provides a comprehensive assessment of governance performance for each of the 54 African countries and is the most comprehensive collection of data on African governance. It combines 93 indicators into four categories namely: Safety and Rule of Law; Participation and Human Rights; Sustainable Economic Opportunity; and Human Development.

IIAG was set up in recognition of the need for a robust, comprehensive and quantifiable tool for civil society to track government performance in Africa. It is Africa's leading annual assessment of governance established to inform and empower the continent's citizens and support governments, parliaments and the civil society to assess progress.

FT Special Report - Innovative Lawyers 2016

Firms are reaching a tipping point on digital as fear of the drive for efficiency recedes

• Artificial intelligence disrupting the business of law
• Lawyers are finally converts to technology
• Legal innovations abound with Europe in flux
• Brexit: law firms set for the great EU demerger
• In-house lawyers show entrepreneurial flair
• Law firms’ helping hand in a migration crisis
• Flexibility is the new aim of law firms
• Rankings: Most innovative European law firms 2016
• Law firms: the tech trailblazers in legal practice
• FT European Innovative Lawyer Awards 2016 — winners announced
• Breadth of legal vision across Europe
• Young legal innovators: new generation of original thinkers
• No more long work hours for millennial lawyers
• Lawyers and the need for speed and lateral thinking
• Lawyers step in to develop new forms of funding
• FT Innovative Lawyers 2016: Methodology
• Expert manoeuvres in competition law
• Special achievement award: James Thornton, ClientEarth law firm

Download the report

UN: New report of the Independent Expert on the human rights impact of tax avoidance, tax evasion, tax fraud and profit shifting

The report focuses on impacts of taxation on human rights and explores the challenges posed to the international order by widespread tax avoidance, tax evasion, tax fraud and profit shifting, facilitated by bank secrecy and a web of shell companies registered in tax havens. The Independent Expert calls for resolute action by the international community, including through the creation of a United Nations tax cooperation body, the adoption of a United Nations tax convention, the phasing out of tax havens, the revision of the Guiding Principles on Business and Human Rights to include the obligation of corporations to pay their fair share of taxes and the adoption of a financial transactions tax.

367 Fortune 500 Companies Collectively Maintain 10,366 Tax Haven Subsidiaries

In 2015, more than 73 percent of Fortune 500 companies maintained subsidiaries in offshore tax havens, according to “Offshore Shell Games,” released today by the U.S. PIRG Education Fund, Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Collectively, multinationals reported booking $2.5 trillion offshore, with just 30 companies accounting for 66 percent of this total. By indefinitely stashing profits in offshore tax havens, corporations are avoiding up to $717.8 billion in U.S. taxes.

“Corporate tax dodging may be legal, but it’s certainly not good for everyday taxpayers and responsible small businesses,” said Michelle Surka, advocate with U.S. Public Interest Research Group. “It disadvantages small businesses that don’t have scores of tax lawyers, creates an economic environment that favors accounting tricks over innovation and real productivity, and forces the rest of us to foot the bill. We’re beginning to see a growing international interest in cracking down on corporate tax dodging, and with $717.8 billion on the line, it’s time for the U.S. to start doing the same.”

“Every year, corporations collectively report that they have tens of billion more in cash stashed offshore than they did the year before, “ said Matthew Gardner of the Institute on Taxation and Economic Policy. “The hard fact is that the U.S. tax code incentivizes tax haven abuse by allowing companies to indefinitely defer taxes on offshore profits until they are ‘repatriated.’ The only way to end this kind of tax avoidance is by closing the loopholes in the tax code that enable it.”

Key findings of the report:

• 367 Fortune 500 companies collectively maintain 10,366 tax haven subsidiaries. The 30 companies with the most money booked offshore for tax purposes collectively operate 2,509 tax haven subsidiaries.

• 58 percent of companies with any tax haven subsidiaries registered at least one in Bermuda or the Cayman Islands, countries with no corporate tax. The profits that American multinationals collectively claim to earn in these island nations totals 1,884 percent and 1,313 percent, respectively of each country’s entire yearly economic output, an impossible feat.

• The 30 companies with the most money booked offshore for tax purposes collectively hold nearly $1.65 trillion overseas. That is 66 percent of the nearly $2.5 trillion that Fortune 500 companies together report holding offshore.

• Only 58 Fortune 500 companies disclose what they would expect to pay in U.S. taxes if these profits were not officially booked offshore. In total, these 58 companies would owe $212 billion in additional federal taxes, equal to the entire state budgets of California, Virginia, and Indiana combined. The average tax rate the 58 companies currently pay to other countries on this income is a mere 6.2 percent, implying that most of it is booked to tax havens.

Among others, the study highlights the following companies:

• Apple: Apple has booked $214.9 billion offshore — more than any other company. It would owe $65.4 billion in U.S. taxes if these profits were not officially held offshore for tax purposes. A recent ruling by the European Commission found that Apple used a tax haven structure in Ireland to pay a rate of just 0.005 percent on its European profits in 2014, and has required that the company pay $14.5 billion in back taxes to Ireland, where the company was paying significantly less than even the tax haven’s standard low tax rate. A U.S. Senate investigation in 2013 uncovered Apple’s two Irish subsidiaries that were tax residents of neither the United States, where they are managed and controlled, nor Ireland, where they are incorporated.
• Nike: The sneaker giant officially holds $10.7 billion offshore for tax purposes on which it would owe $3.6 billion in U.S. taxes. This implies Nike pays a mere 1.4 percent tax rate to foreign governments on those offshore profits, indicating that nearly all of the money is officially held by subsidiaries in tax havens. The shoe company, which operates 931 retail stores throughout the world, does not operate one in Bermuda.
• Goldman Sachs reports having 987 subsidiaries in offshore tax havens, 537 of which are in the Cayman Islands despite not operating a single legitimate office in that country, according to its own website. The bank officially holds $28.6 billion offshore.

The report concludes that to end tax haven abuse, Congress should end incentives for companies to shift profits offshore, close the most egregious offshore loopholes, strengthen tax enforcement, and increase transparency.

Progress in African governance over last decade held back by deterioration in safety and rule of law, Mo Ibrahim Foundation reports

The 2016 Ibrahim Index of African Governance (IIAG), launched today by the Mo Ibrahim Foundation, reveals that improvement in overall governance in Africa over the past 10 years has been held back by a widespread deterioration in the category of safety and rule of law.

The tenth edition of the IIAG, the most comprehensive analysis of African governance undertaken to date, brings together a decade of data to assess each of Africa’s 54 countries against 95 indicators drawn from 34 independent sources. This year, for the first time, the IIAG includes Public Attitude Survey data from Afrobarometer. This captures Africans’ own perceptions of governance, which provide fresh perspective on the results registered by other data such expert assessment and official data.

Over the last decade, overall governance has improved by one score point at the continental average level, with 37 countries – home to 70% of African citizens – registering progress. This overall positive trend has been led mainly by an improvement in human development and participation and human rights. Sustainable economic opportunity also registered an improvement, but at a slower pace.

However, these positive trends stand in contrast to a pronounced and concerning drop in safety and rule of law, for which 33 out of the 54 African countries – home to almost two-thirds of the continent’s population – have experienced a decline since 2006, 15 of them quite substantially.

This worrying trend has worsened recently, with almost half of the countries on the continent recording their worst score ever in this category within the last three years. This is driven by large deteriorations in the sub-categories of personal safety and national security. Notably, accountability is now the lowest scoring sub-category of the whole index. Without exception, all countries that have deteriorated at the overall governancelevel have also deteriorated in safety and rule of law.

The improvement in the participation and human rights category, found in 37 countries across the continent, has been driven by progress in gender and in participation. However, a marginal deterioration appears in the rights sub-category, with some worrying trends in indicators relating to the civil society space.

Sustainable economic opportunity is the IIAG’s lowest scoring and slowest improving category. However, 38 countries – together accounting for 73% of continental GDP – have recorded an improvement over the last decade. The largest progress has been achieved in the infrastructure sub-category, driven by a massive improvement in the indicator digital & IT infrastructure, the most improved of all 95 indicators. However, the average score for infrastructure still remains low, with the indicator electricity infrastructure registering a particularly worrying decline in 19 countries, home to 40% of Africa’s population. Progress has also been achieved in the rural sector sub-category.

Human development is the best performing category over the last decade, with 43 countries - home to 87% of African citizens – registering progress. All dimensions – education, health and welfare – have improved, although progress in the welfare sub-category has been affected by declines in the social exclusion and poverty reduction priorities indicators.

Mo Ibrahim, chair of the Mo Ibrahim Foundation, says: ”The improvement in overall governance in Africa over the last decade reflects a positive trend in a majority of countries and for over two-thirds of the continent’s citizens.

“No success, no progress can be sustained without constant commitment and effort. As our index reveals, the decline in safety and rule of law is the biggest issue facing the continent today.

“Sound governance and wise leadership are fundamental to tackling this challenge, sustaining recent progress and ensuring that Africa’s future is bright.”

Key findings of the 2016 IIAG include: 

• Over the past decade, the continental average score in overall governance has improved by one point.
• Since 2006, 37 countries, hosting 70% of African citizens, have improved in overall governance.
• The greatest improver at the overall governance level over the decade is Côte d’Ivoire (+13.1), followed by Togo (+9.7), Zimbabwe (+9.7), Liberia (+8.7) and Rwanda (+8.4).
• Even if Ghana and South Africa feature in the top 10 performing countries in overall governance in 2015, they are also the eighth and tenth most deteriorated over the decade.
• At the overall governance level, the three highest scoring countries in 2015 are Mauritius, Botswana and Cabo Verde, and the three most improved over the decade are Côte d’Ivoire, Togo and Zimbabwe.
• Safety and rule of law is the only category of the index to register a negative trend over the decade, falling by -2.8 score points in the past 10 years.
• In 2015, almost two-thirds of African citizens live in a country where safety and rule of law has deteriorated over the last 10 years.
• Accountability is the lowest scoring (35.1) of the 14 sub-categories in 2015.
• The continental average score for the corruption & bureaucracy indicator has declined by -8.7 points over the last decade, with 33 countries registering deterioration, 24 of them falling to their worst ever score in 2015.
• A large majority (78%) of African citizens live in a country that has improved in participation and human rights over the past decade.
• Progress over the decade in participation & human rights (+2.4 points) has been driven by gender (+4.3) and participation (+3.0), while rights (-0.2) registered a slight decline.
• Six of the 10 highest scoring countries in rights have registered deterioration in the past 10 years.
• Two-thirds of the countries on the continent, representing 67% of the African population, have shown deterioration in freedom of expression over the past 10 years. 11 countries, covering over a quarter (27%) of the continent’s population, have declined across all three civil society measures – civil society participation, freedom of expression and freedom of association & assembly – over the decade.
• In 2015, more than two-thirds of African citizens (70%) live in countries where sustainable economic opportunity has improved in the last ten years.
• Digital and IT infrastructure is the most improved indicator (out of 95) of the IIAG over the decade.
• Diversification is the lowest scoring indicator in the IIAG, and shows deterioration over the past 10 years.
• 40% of Africans live in a country which has registered deterioration in electricity infrastructure over the decade, with over half of Africa’s economy affected by this issue.
• The marginal deterioration of -0.8 points over the decade registered in business environment masks considerably diverging trends, with 24 countries declining, five by more than -10.0 points, and 28 countries progressing, five by more than +10.0 points.
• Niger, Rwanda, Côte d’Ivoire, Togo and Kenya have progressed by more than +10.0 points in business environment over the decade.
• 43 countries, hosting more than four-fifths (87%) of the African population, have registered improvement in human development over the decade. Rwanda, Ethiopia, Angola, and Togo have increased by more than +10.0 points in human development over the decade.
• All 54 countries have registered progress in child mortality over the decade.
• Over the last 10 years, the poverty indicator has registered improvement (+7.2 points), with 29 countries, accounting for 67% of Africa’s population and 76% of Africa’s GDP, improving.
• However, the poverty reduction priorities indicator has registered an average decline of -1.3 points, with 23 countries, hosting 45% of Africa’s population, declining.

Mrinal Roy: The PM’s post cannot be bartered. Nor is it is a family heirloom that can be bequeathed

Put simply, democratic practices prevailing in Mauritius are aeons distanced from those of the best democracies of the world such as the United Kingdom. The 70 MPs of the National Assembly are elected by the people to serve them strictly in accordance to the brief given to them. A handful of them even if they hold the majority cannot usurp the people’s paramount right and power to choose who they decide should head the government. This choice belongs solely and exclusively to the people.

Mauritius Times

Mauritius Times: Back to Politics as Usual

Are we then back to politics as usual? A situation in which voters, disgruntled at the performance – or the lack of it -- of incumbents of power are prepared to publicly show their spite by adhering by default to whatever alternative is on offer? Are the MMM and the PMSD – sensing this feeling of rejection against the government lost in serial contradictions and lacking in achievement – differentiating themselves as something better than the governing team, of which the PMSD is paradoxically a partner? Are voters prepared to once again take the risk, short of anything better?

Mauritius Times