Quantum Global Demands Fair Hearing in Mauritius as Damage to Investments Gets Worse

Quantum Global Group repeated its call for a fair hearing in Mauritius after the Financial Intelligence Unit (FIU) again declined in court to disclose the allegations behind restriction orders against the group.

The FIU has refused to disclose the reasons for the orders, which led to a freeze on the group’s bank accounts and the suspension of its licenses, for three weeks even when large extracts of what appears to be the FIU legal rationale have been reported in the press in Mauritius.

The dilatory tactics of the FIU appear part of a strategy to inflict maximum damage on the investment funds of Quantum Global Group, which is in a contractual dispute with its client, the Fundo Soberano de Angola (FSDEA).

Quantum Global is dismayed that the FSDEA has resorted to legal action in several jurisdictions rather than seeking a negotiated settlement or arbitration in accordance with the contractual agreement. Despite the false allegations being reported in the Mauritius press, all monies of the FSDEA are in place and accounted for.

The banking freeze is causing severe financial damage to the FSDEA’s own portfolio. It has impacted employees, clients, partners and the important investment projects that Quantum Global Group manages across Angola and Africa on behalf of the FSDEA.

This damage has been made worse by the refusal of the Mauritius authorities to release funds required for the continuance of the ordinary course of business, such as the payment of salaries to employees and thousands of African workers indirectly employed by the funds’ portfolio companies.

The group has maintained that the legal proceedings are unwarranted because Quantum Global has followed the investment policies of the FSDEA and the laws and regulations of every jurisdiction where it operates. The FSDEA has overseen Quantum Global’s investments on a quarterly basis since the inception of the funds and the value of the funds has increased under Quantum Global’s management, according to latest valuations.

The group has argued it is in the interest of Angola to apply any new FSDEA strategy in good faith and in accordance with contract law, to maintain the value to the portfolio and secure the jobs already created in Angolan industries including ports, forestry, agriculture and real estate.

Quantum Global looks forward to resolving this situation in a professional manner.

Quantum Global Group Denounces Intimidating FSDEA Tactics Amid Court Proceedings

Quantum Global Group on Sunday denounced the intimidating tactics of the Fundo Soberano de Angola (FSDEA), its client, amid a mounting number of legal proceedings in Mauritius and the United Kingdom.

The group reiterated its call for fair proceedings three weeks after a Mauritius court issued the first of a series of restriction orders on Quantum Global Group companies in Mauritius, without disclosing the underlying reasons for the case.

A UK High Court reportedly granted an application by the FSDEA for a worldwide freezing order on several Quantum Global Group companies on Friday. The group has yet to be served the underlying court papers.

Following a change in strategy, the new administration of the FSDEA announced on Friday its intention to remove Quantum Global Group from the management of the private equity funds based in Mauritius. This would breach their long-term contractual agreements.

Quantum Global continues to be dismayed that the FSDEA has resorted to intimidation by launching legal action in multiple jurisdictions rather than seeking a negotiated settlement or arbitration in accordance with the contractual arrangements.

While the reasons for the court actions against Quantum Global have yet to be officially disclosed, there has been a barrage of unfounded allegations against Quantum Global Group in the Mauritius press.

The group has maintained that the court applications are unwarranted because Quantum Global has followed the approved investment policies of the FSDEA and the laws and regulations of every jurisdiction where it operates. The FSDEA has overseen Quantum Global’s investments on a quarterly basis since the inception of the funds and the value of the funds has increased under Quantum Global’s management, according to latest valuations.

Any hasty move to freeze or wind down the FSDEA funds would lead to a significant loss of value of the existing portfolio because many of these projects are in the early phase of development.

The group has further argued it is in the interest of Angola to apply any new strategic direction in good faith and in accordance with international contractual law, to maintain the value to the FSDEA portfolio and secure the jobs already created in Angolan industries including ports, forestry, agriculture and real estate.

As a result of the absence of due process and the rush to sanction Quantum Global, the group has seen its business and the value of the FSDEA funds seriously damaged. The freezing orders have had a real impact on employees, clients, partners and the important investment projects that the group manages across Angola and Africa.

This negative impact has been amplified by the refusal of the Mauritius authorities to release funds required for the continuance of the ordinary course of business, such as the payment of salaries to employees and thousands of African workers indirectly employed by its portfolio companies.

While there has been no update from the FSDEA on the new strategy, Quantum Global looks forward to resolving this situation in an amicable manner.

The Oxford Handbook of Electoral Systems

No subject is more central to the study of politics than elections. All across the globe, elections are a focal point for citizens, the media, and politicians long before—and sometimes long after—they occur. Electoral systems, the rules about how voters' preferences are translated into election results, profoundly shape the results not only of individual elections but also of many other important political outcomes, including party systems, candidate selection, and policy choices. Electoral systems have been a hot topic in established democracies from the UK and Italy to New Zealand and Japan. Even in the United States, events like the 2016 presidential election and court decisions such as Citizens United have sparked advocates to promote change in the Electoral College, redistricting, and campaign-finance rules. Elections and electoral systems have also intensified as a field of academic study, with groundbreaking work over the past decade sharpening our understanding of how electoral systems fundamentally shape the connections among citizens, government, and policy. This volume provides an in-depth exploration of the origins and effects of electoral systems.

Making a Graceful(ish) Brexit

During a recent Bloomberg International Tax Webinar on Brexit and indirect tax, the moderator polled participants about their businesses’ "Brexit readiness." 

BNA

Vistra doubles international expansion services business with acquisition of US-market leader Radius

Vistra, one of the world’s leading providers of international incorporations, trust, fiduciary, private office and fund administration services, today announced it has entered an agreement to acquire Radius, a specialist US-based provider of international expansion services. Vistra is acquiring Radius from the private equity firm Hg.

The transaction doubles Vistra’s International Expansion Services (IES) business, making it a market leader in IES services, including the number one market position in the USA. Vistra’s IES business helps clients navigate expansion into new markets, including establishing offices, obtaining the necessary licensing to operate in foreign markets and ongoing services, such as compliance and payroll.

Radius, headquartered in Boston with offices across the United States and in the United Kingdom, India, China, Singapore, Brazil and the Netherlands, provides managed services, advisory services and OverseasConnect, its integrated cloud-based software platform, to more than 500 clients operating in 80 countries. The firm has 880 employees globally. Radius is led by CEO Stephen M. Chipman, who will become the Group Managing Director of Vistra’s IES business.

Following the acquisition, Vistra will have a global IES team of 1,300 employees and a support network of over 3,300 staff, operating in over 70 offices and 40 jurisdictions.

Martin Crawford, CEO of Vistra, said: “The Radius team has developed a highly successful global business, which is a natural fit with Vistra’s IES operations. Joining forces means our clients will have the highest quality people, technology and processes to help them grow with confidence when they are expanding internationally. We are delighted to welcome Stephen and his team to the Vistra family.”

Stephen Chipman, CEO of Radius, said: “The combination of Vistra and Radius creates a leading global provider of quality international expansion services. Vistra is the ideal partner for Radius given our values and culture align so closely. We are excited about the future opportunities for our clients and employees.”

Radius will be rebranded under the Vistra brand following completion of the transaction.

Quantum Global to seek international arbitration in Mauritius dispute

Quantum Global and its founder have notified the Government of Mauritius of their intention to resort to international arbitration if the dispute over its business affairs in Mauritius is not settled within six months.

Quantum Global and its founder, Jean-Claude Bastos de Morais, have seen their bank accounts frozen and business licenses suspended by the Mauritius courts on the basis of allegations that have yet to be made public. These measures are causing significant financial damage to Quantum Global and the private equity funds that the company manages on behalf of the Angolan sovereign wealth fund (FSDEA).

“We have notified the Government of Mauritius of our intention to resort to international arbitration if this matter is not settled within six months,” Mr Bastos said. Mauritius and Switzerland have a Bilateral Investment Treaty that protects the rights of investors in the case of disputes.

“As a result of the absence of due process and the rush to sanction Quantum Global, the company has seen its business seriously damaged. This has a real impact on our employees, our clients, our partners and the important investment projects we are managing across Angola and Africa. We urgently need to have a fair hearing,” Mr Bastos added.

Quantum Global had applied to the Mauritius courts to release some money from its frozen bank accounts to pay salaries and legal fees. The hearing took place on Wednesday and the Financial Intelligence Unit of Mauritius objected to the application, so the court set a further hearing date for May 11.

“The delay in releasing funds to pay salaries and legal costs causes further financial damage to Quantum Global and in particular, causes further hardship for our employees, and indirectly the thousands of hard working families who work for our portfolio companies in Angola and Africa,” Mr Bastos said.

While the reasons for the initial court actions against Quantum Global have yet to be officially disclosed, there has been a barrage of unfounded allegations against Quantum Global in the Mauritius press.

Mr Bastos said: “We believe that the underlying accusations against us will not stand up to scrutiny, which explains why they are not being made public.”

“The truth is that all the money of the Angolan government is accounted for in publicly disclosed accounts that have been independently audited for a number of years. The overall FSDEA portfolio has grown in value under Quantum Global’s management.”

“We fear that these actions against Quantum are a pretext for breaking our contractual agreement with the Angolan wealth fund.”

Quantum Global has maintained that, from a legal standpoint, the commercial rationale of the General Partner of the seven Limited Partnerships registered in Mauritius remains, along with their contractual legitimacy.

“We look forward to resolving this situation with the FSDEA in an amicable manner,” Mr Bastos said.

ICIJ: Angolan Tycoon’s Frozen Funds Highlight KPMG’s Role In Offshore Secrecy

Mauritian authorities have frozen 91 bank accounts linked to investor Jean-Claude Bastos, a key figure from the Paradise Papers with close connections to Angola’s former leaders.

ICIJ

UK Privy Council rules on Investec v Glenalla trustee indemnity dispute

The Privy Council has handed down judgment in Investec Trust (Guernsey) v Glenalla Properties (2018 UKPC 7), concerning the personal liability of trustees for loans they had made to some offshore companies. The ruling in this long-running dispute is a significant one in the international law of trustee engagements, and the scope of trustee indemnification.

STEP

Serle Court

Judicial Committee of the Privy Council (judgment, PDF)

JCPC (Press summary, PDF)

STEP International News 3 February 2014: Guernsey Royal Court decision places trustees at risk

Cape Town’s CoworKite expands “workation” concept to Mauritius

The Cape Town-based CoworKite, which organises community-driven co-working and co-living retreats, has expanded its concept to Mauritius, offering location-independent professionals the chance to work from the beach for certain periods of time.

Disrupt Africa

The relevance of the GDPR to offshore

The GDPR, more precisely the General Data Protection Regulation, will come into force in the EU on 25 May 2018. Being EU law it might reasonably be imagined that it would be of minor direct relevance to institutions and establishments based offshore and outside of the EU. Not so. The territorial scope of the new regime is widely cast and will undoubtedly be of relevance to information and data travelling from the EU to offshore (and visa versa).

Quantum Global Group Press Release

Quantum Global announced today that it welcomed the decision of a Mauritius Court to move forward with due process by holding a fair hearing on the allegations against the company.

The Financial Intelligence Unit, which made the initial application to the Supreme Court to freeze Quantum Global’s bank accounts in Mauritius on April 7, is still refusing to provide any details about the underlying cause for the action. The next hearing is scheduled for Wednesday, April 25th.

The FIU action prompted the Financial Services Commission to suspend the business licenses Quantum Global uses to manage money on behalf of the Angolan sovereign wealth fund.

The banking freeze has already had a seriously damaging impact on Quantum Global’s employees, clients, partners and the important investment projects it manages in Angola and Africa. Thousands of valued workers across Africa are affected, including 30 staff in Mauritius.

“This is not just about bankers and lawyers, thousands of African families are suffering as a result of these unwarranted actions by the Mauritius authorities,” said Jean-Claude Bastos de Morais, Founder and Group Chairman of Quantum Global.

The banking freeze has already had a significant negative impact on Quantum Global’s reputation and businesses, and these damages are rising every day. As long as the freeze is in place, the funds under Quantum Global’s management are missing out on new opportunities to follow through on deal negotiations, both in terms of completing new investments and selling interests in existing investments.

Mr Bastos said the actions taken against Quantum Global were unjustified, because the company has performed its fund management duties successfully on behalf of the Angolan sovereign wealth fund, despite false and damaging allegations made against the firm.

“We have successfully challenged all the false and damaging allegations made against us in some sections the media. Now we read press reports making new false accusations of impropriety, but the truth is that all the money of the Angolan government is accounted for in publicly disclosed accounts that have been independently audited for a number of years,” Mr Bastos said.

“Furthermore, the overall FSDEA portfolio has grown in value and it is this value we are trying to protect by demanding due process and clearing our name,” concluded Bastos.

Quantum Global is an investment manager and conducts its activities in accordance with the approved investment policies and applicable laws in Mauritius and worldwide. The seven investment funds based in Mauritius comply with strict IFRS reporting standards.

Is Netherlands Becoming the New 'Mauritius Route’ for FDI Flows Into India?

Now the third biggest contributor of FDI to India, over 80% of the investment flows that came from Netherlands in 2017 were 'routed' and not 'direct'.

The Wire

The UK Refused To Raid A Company Suspected Of Money Laundering, Citing Its Tory Donations

The British government refused to assist a French investigation into suspected money laundering and tax fraud by the UK telecoms giant Lycamobile – citing the fact that the company is the “biggest corporate donor to the Conservative party” and gives money to a trust founded by Prince Charles.

Part One: Tory Donor's Cash Drops Caught On Film

Part Two: Lycamobile Is Embroiled In Sri Lanka's Hunt For Stolen Assets

Part Three: Lycamobile Reported To Cops For “Money Laundering”

Part Four: How Paris Police Closed In On The Tories' Biggest Donor

Part Five: The UK Refused To Raid A Company Suspected Of Money Laundering, Citing Its Tory Donations

Quantum Global Seeks Due Process in Mauritius

Quantum Global reiterated today it is confident all matters will be resolved positively once the company receives details about the underlying cause for the restriction order and license suspension of its operations in Mauritius. The Financial Services Commission and the Financial Investigation Unit have been called before the Court to explain their actions, with an initial hearing set for tomorrow, Friday, April 20th.

Quantum Global continues to be dismayed that while the underlying cause for the actions of the authorities have not been provided to the Company, local Mauritius media have reported on key aspects of these actions.

“As I have stated throughout this unfair and damaging process, it has been hard to defend ourselves against actions by the authorities when the rationale has not been made clear despite our repeated attempts to receive this information,” said Jean-Claude Bastos de Morais, Founder and Group Chairman of Quantum Global.

Quantum Global is an investment manager and conducts its activities in accordance with the approved investment policies and applicable laws in Mauritius and worldwide. The seven investment funds based in Mauritius comply with strict IFRS reporting standards.

“We remain confident and resolute in our ability to defend ourselves vigorously and we plan to do so when we fully understand the specific reasons for the actions taken against us,” Mr Bastos concluded.

International Tax: When Countries Go Rogue

Cash-strapped governments eye up international businesses generating revenue in their own jurisdictions and want a slice of the action. Yet, as these companies grow, competition between governments is becoming fierce as each tries to entice these businesses to domicile themselves within their economies. Meanwhile, cross-border business is at a real risk of suffering double taxation as tax authorities take unilateral action. Companies are going to need to be nimble to respond to these changes and not assume that they will go away any time soon. How will they respond?

BNA

MFS Africa becomes first African FinTech funded by a China-based VC in $4.5M Series B round led by LUN Partners Group

MFS Africa, a leading Pan-African FinTech company, today announced a $4.5m Series B funding round led by LUN Partners Group, a China-based global investment management group. Goodwell Investments, an Amsterdam based investment firm focused on financial inclusion, fintech and inclusive growth, as well as several angel investors completed the round.

MFS Africa is the first African FinTech to receive funding from a China-based global investment management group. The investment is in-line with China’s ‘Belt and Road’ strategy, and follows wider interest from global investors in African FinTech, which took nearly a third of African VC funding in 2017.

MFS Africa operates the largest digital payments network in Africa. The company connects over 170m mobile wallets through 100+ partners, including Airtel, Ecobank, MTN, Orange and Vodafone across 55 markets. By providing a single access point for global organisations to reach and transact with millions of African consumers and businesses across networks, across borders and across currencies, MFS Africa aims to drive financial inclusion and accelerate the continent’s digital economy.

As part of the deal, MFS Africa will work with LUN Partners Group, its portfolio companies, and investor base to boost financial inclusion in countries targeted by China’s ‘Belt and Road’ initiative. The Belt and Road initiative is an ambitious economic strategy that aims to disseminate China’s services, investment, and infrastructure at a global level. LUN Partners will work with MFS Africa to help Chinese and other Asian enterprises, especially FinTech and ecommerce firms, drive financial inclusion and trade more easily in Africa by providing a single access point to scale and monetise digital services across the continent using mobile money networks.

“China is home to some of the most exciting and fastest growing technology firms in the world, and Africa is the birthplace of mobile money. At the same time, the continent remains fragmented with no single network able to serve the region. Organisations that want to transact with African consumers and businesses need to secure agreements with each and every provider, stunting competition and growth,” said Peilung Li, Founder and Chairman of LUN Partners Group. “MFS Africa has spent years connecting these mobile money services to create one Pan-African network which can substantially boost cross border trade and open up new opportunities for Chinese as well as global firms.”

By connecting African mobile wallets to each other and the formal financial economy, MFS Africa can drive financial inclusion across the region. Its digital payments hub - accessible via one API - exceeds industry standards in terms of performance and compliance, allowing mobile operators and financial institutions to deliver a range of essential and sophisticated services to underserved individuals.

"At Goodwell Investments, we’re exclusively focused on companies that can generate good financial returns and high social impact at the same time,” said Wim van der Beek, Founder and Partner of Goodwell Investments. “MFS Africa plays a key role in our investment strategy. It is uniquely placed to accelerate the speed and scale of delivering financial services to those that need them most across Africa and beyond.”

The investment will fuel the expansion of MFS Africa’s network in Africa and beyond and help unlock new capabilities including a merchant services offering. This offering will allow major retailers and internet companies to accept payments from consumers via their mobile wallets. The investment follows the appointment of industry luminaires Michael Joseph, widely credited with spearheading M-Pesa, and Reg Swart, leader at mobile money pioneer, Fundamo, to evolve and expand its capabilities.

“The pioneering funding round, and strategic nature of the investors, is a testament to MFS Africa’s performance and unique potential,” said Dare Okoudjou, Founder and CEO of MFS Africa. “By connecting mobile money users to each other, we have effectively built the biggest digital payments network in Africa and we’re now perfectly positioned to drive financial inclusion, accelerate the African digital economy, and connect millions of African consumers and businesses to the global economy.”

Quantum Global Comments on Events in Mauritius

Quantum Global group announced today that the seven private equity funds managed by the Company are experiencing significant and growing financial damage as a result of the freezing of the company’s bank accounts and the suspension of its investment licenses by the authorities in Mauritius.

Quantum Global petitioned the Court to oblige the authorities to disclose the underlying reason for freezing the bank accounts and suspending the Company’s licenses. The Company welcomes the fact that the Financial Services Commission and the Financial Investigation Unit have been called before the Court to explain their actions, with a hearing set for Friday, April 20th.

“We look forward to hearing the rationale used to move against us, but it is worth noting that actions taken have already had a significant negative impact on our reputation and the businesses we operate, and these damages are rising every day,” said Jean-Claude Bastos de Morais, Founder and Group Chairman of Quantum Global.

Quantum Global manages seven major private equity funds in Mauritius, with more than a dozen major investments in African infrastructure, health care, timber, agriculture, hotels, mining and structured equity.

“We have been unable to fulfil our basic obligations towards staff, investment partners, creditors, contractors and tax authorities because of the actions taken by the authorities,” Mr Bastos said. “If this situation drags on, it could trigger serious legal and contractual disputes including claims for damages, the suspension of banking relationships and the imposition of penalties.” he added.

Thousands of valued employees across Africa are not able to receive their salaries, including 30 staff in Mauritius.

In addition to the rising costs to the business, Quantum Global’s investment funds are also missing out on new opportunities to follow through on deal negotiations, both in terms of completing new investments and selling interests in existing investments.

“For every extra day that the restriction order and freezing orders are in place, the costs of this disruption rise significantly. We look forward to defending ourselves when the reasons for these actions have been disclosed, and we are confident of a positive outcome once all the facts are known,” Mr Bastos said.

Quantum Global conducts its activities in accordance with approved investment policies and applicable laws in Mauritius and worldwide. The seven investment funds based in Mauritius comply with strict IFRS reporting standards.

FSC: Plus de 50 licences suspendues et révoquées depuis 2010

Depuis deux semaines, on a vu la suspension de plusieurs licences émises par la Financial Services Commission (FSC). Ces licences concernent l’Investment Banking d’Alvaro Sobrinho Africa Ltd, et sept sociétés appartenant au groupe Quantum Global, dont le Chief Executive Officer, Jean-Claude Bastos de Morais, fait la Une des journaux ces derniers jours. Depuis 2010, le régulateur a suspendu et révoqué la licence de plus de 50 sociétés. Dans des cas, certaines sociétés avaient même défrayé la chronique à l’époque

BIZweek.mu

Offshore and Money Laundering : a hanging sword over Mauritius

Stephen Platt, one of the worlds’s most experienced practitioners in the conduct of regulatory investigations relating to financial crime, rated Mauritius as a C+ for money laundering activities last year. However, with the recent scandals, the ratings must have surely been on a downward trend. The wound further given by Alvaro Sobrinho is still raw and we recently came to know about Jean-Claude Bastos. Is the sword of Damocles hanging over Mauritius?

News on Sunday

Quantum Global Demands a Fair Hearing in Mauritius

Quantum Global announced today that it has formally requested that the Financial Services Commission (FSC) of Mauritius provide a full explanation for its decision to suspend the company’s licenses last week and allow the company to receive a fair hearing.

The FSC said it suspended the licenses on April 8 on the basis of a restriction order issued by the Supreme Court of Mauritius and gave Quantum Global seven days to make a written representation. But the regulator has not provided any details about the underlying cause for the restriction order or the license suspension.

“It is hard to defend ourselves against actions by the authorities when the rationale has not been made clear despite our repeated attempts to receive this information,” said Jean-Claude Bastos de Morais, Founder and Group Chairman of Quantum Global.

“As a result of the absence of due process and the rush to sanction us, Quantum Global has seen its business seriously damaged. This has a real impact on our employees, our clients, our partners and the important investment projects we are managing across Angola and Africa. That is wrong and against the basic principles of natural justice. We urgently need to have a fair hearing so we can clear our name and continue conducting our investment activities for the benefit of our clients and positive development of Africa,” he added.

“As a significant investor in Mauritius, Quantum Global expects the FSC to follow due process and give Quantum Global an opportunity to defend itself. It also would expect the FSC to be supportive of any significant investor wishing to transparently address its case and prove that it has not committed any wrongdoing.”

Quantum Global is an investment manager and conducts its activities in accordance with the approved investment policies and applicable laws in Mauritius and worldwide. The seven investment funds based in Mauritius comply with strict IFRS reporting standards.

Quantum Global is also fighting false media allegations that the company was implicated in an investigation by Angolan authorities into a suspect $500 million bank transfer. These false allegations persist despite an official statement published on Quantum Global’s website on 4th April that neither Quantum Global nor Mr Bastos were party to the reported transaction or had any involvement in it.

Mr Bastos said: “I vehemently deny any such allegation and can unequivocally confirm that neither Quantum Global nor I were party to the reported transaction or had any involvement in it.”

“We urge the FSC to respect due process and note that any additional steps taken without due process being followed would cause further significant damage to us.”

“We remain confident and resolute in our ability to defend ourselves vigorously and we plan to do so when we fully understand the specific reasons for the actions taken against us,” Mr Bastos concluded.

International Investment: The 2018 Global Company Formation Survey

International Investment’s authoritative guide to company formation in 40 key jurisdictions around the world. Compiled with input from government regulators and leading industry professionals, The 2018 Global Company Formation Survey is an indispensable source detailing need-to-know corporate services, legislative developments and policy change.

Proxeus enables first business to be legally registered using blockchain

Answering the digitalSwitzerland challenge, blockchain innovators Proxeus, along with partners Canton Zug, the home of Switzerland’s Crypto Valley; Grunder Rechtsanwälte; IBM Switzerland; Kaiser Odermatt & Partner; Swisscom; VermögensZentrum; and Zwicky Windlin & Partner proved that the entire process for registering a Swiss startup in the commercial register can be completed in a fraction of the previous time required. This speed record-setting achievement is a Swiss – and likely world’s – first, and was done by means of combining a digital workflow and Hyperledger Blockchain with the existing IT systems of the bank and the commercial registry.

HMRC: Tax avoidance involving profit fragmentation

HMRC are inviting views on proposals to tackle tax avoidance schemes designed to move UK profits outside the charge of UK tax, often using offshore trusts and companies. New legislation which will take effect in April 2019, would bring these profits within the UK tax charge and require notification of the arrangements to HMRC and earlier payment of tax.

Tax Avoidance involving Profit Fragmentation - consultation document

HBR: GDPR and the End of the Internet’s Grand Bargain

In May the European Union’s General Data Protection Regulation goes into effect, two years after passage by the European Parliament. This radical new privacy law, which covers any business that processes information about EU residents, will dramatically affect the way data is collected, stored, and used, including for U.S. companies doing business abroad. Those changes may prove to be more profound than EU regulators have anticipated. Facebook’s woes, following continued reports of major data breaches at other leading companies, have amplified calls for GDPR-like legislation in the United States. GDPR and its progeny may lead to the end of what has long been the internet’s grand bargain: the exchange of free or subsidized content for personalized advertising.

Harvard Business Review

Dawood Rawat v. The Republic of Mauritius: Award on Jurisdiction

L’intégralité de la décision du tribunal d’arbitrage de Bruxelles by L'express Maurice on Scribd

South Africa: SARS Tax Treatment of Cryptocurrencies

The South African Revenue Service (SARS) will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income.

The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued.  Failure to do so could result in interest and penalties.

Taxpayers who are uncertain about specific transactions involving cryptocurrencies may seek guidance from SARS through channels such as Binding Private Rulings (depending on the nature of the transaction).

Increased attentiveness and speculation regarding the future of cryptocurrencies has prompted calls for SARS to provide direction as to how cryptocurrencies should be treated for tax purposes. However, as indicated in this media statement, there is an existing tax framework that can guide SARS and affected taxpayers on the tax implications of cryptocurrencies, making a separate Interpretation Note unnecessary for now.

Cryptocurrency (typified by Bitcoin) is an internet-based digital currency that exists almost wholly in the virtual realm. A growing number of proponents support its use as an alternative currency that can pay for goods and services much like conventional currencies.

In South Africa, the word “currency” is not defined in the Income Tax Act (the Act).  Cryptocurrencies are neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange. As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature.

Whilst not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of “gross income” in the Act.

Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under “gross income”.

Alternatively such gains may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the CGT paradigm.

Determination of whether an accrual or receipt is revenue or capital in nature is tested under existing jurisprudence (of which there is no shortage).

Taxpayers are also entitled to claim expenses associated with cryptocurrency accruals or receipts, provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade.

Base cost adjustments can also be made if falling within the CGT paradigm.

Gains or losses in relation to cryptocurrencies can broadly be categorised with reference to three types of scenarios, each of which potentially gives rise to distinct tax consequences:

(i) A cryptocurrency can be acquired through so called “mining”. Mining is conducted by the verification of transactions in a computer-generated public ledger, achieved through the solving of complex computer algorithms. By verifying these transactions the “miner” is rewarded with ownership of new coins which become part of the networked ledger.  

This gives rise to an immediate accrual or receipt on successful mining of the cryptocurrency. This means that until the newly acquired cryptocurrency is sold or exchanged for cash, it is held as trading stock which can subsequently be realized  through either a normal cash transaction (as described in (ii) or a barter transaction as described in (iii) below. 

(ii) Investors can exchange local currency for a cryptocurrency (or vice versa) by using cryptocurrency exchanges, which are essentially markets for cryptocurrencies, or through private transactions. 

(iii) Goods or services can be exchanged for cryptocurrencies. This transaction is regarded as a barter transaction. Therefore the normal barter transaction rules apply.

Value-Added Tax (VAT)

The 2018 annual budget review indicates that the VAT treatment of cryptocurrencies will be reviewed. Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies.

Boston Consulting Group (BCG) - Pioneering One Africa: The Companies Blazing a Trail Across the Continent

African business is integrating Africa—economically and otherwise. It has been a long time coming, and plenty of hurdles remain, but the economic integration of the continent, which many see as key to its continued development, is manifest. Driving it are indigenous entrepreneurs and fast-growing African companies, as well as multinational corporations (MNCs).

African pioneers do eight things:

• They actively expand their footprint.
• They make greenfield investments.
• They use M&A to expand.
• They build brand recognition.
• They innovate locally.
• They develop a people advantage.
• They build local ecosystems.
• They connect Africa by facilitating the movement of people, goods, data, and information.

PDF

GFM: What future for the Mauritius IFC?

Check out the 50th Anniversary of Independence edition of Global Finance Mauritius magazine - what future for the Mauritius IFC?