IMF Staff Report for the 2019 Article IV Consultation: Mauritius

Mauritius is pursuing an ambitious strategy—centered around upgrading the infrastructure, promoting diversification, and spurring private investment—to foster inclusive growth and reach the high-income country milestone. Several structural challenges, notably, a shortage of suitably skilled workers, an aging population, and declining productivity and cost competitiveness confront Mauritius in meeting these goals. Moreover, speedy compliance with international anti-tax avoidance initiatives and AML/CFT standards is necessary to remain an attractive investment destination. Notable efforts are underway to address these challenges.

Country Report No. 19/108

Country Report No. 19/109

McKinsey: Confronting the risks of artificial intelligence

With great power comes great responsibility. Organizations can mitigate the risks of applying artificial intelligence and advanced analytics by embracing three principles.

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Raconteur: Future Workplace 2019

What does the future workplace look like? Without having reached a complete consensus, experts believe it will be smarter, greener and more efficient. The Future Workplace special report explores the benefits of a biophilic office, the need for dedicated learning spaces, and how setting up shop in a tech hub can give your startup a leg up. It covers how to tackle freelancer isolation and asks whether, in the era of messaging and collaboration apps, the desk phone is dead. Also featured is comment on how innovative tech can improve the life of the workforce and an infographic on how we can learn to work better together, in a time where we have five generations in the workforce.

EDB Mauritius: New ESAAMLG report underlines Mauritius’ full compliance to FATF recommendations

Mauritius continues to be a compliant, secure and safe business and investment destination, as highlighted by the ESAAMLG’s (Eastern and Southern Africa Anti-Money Laundering Group) latest mutual evaluation report.

In the document, Mauritius is shown as being largely compliant with respect to the 40 recommendations of the Financial Action Task Force. Commenting on the report, Minister of Financial Services and Good Governance Sudhir Sesungkur stressed the fact that Mauritius remains one of the safest and most transparent jurisdictions in the world:

“Mauritius has yet again proved that it is agile and able to adapt to more stringent regulations, and continues to actively participate in a new wave of healthy and constructive investment environment.”

In September 2018, the ESAAMLG mutual evaluation report on Mauritius, while highlighting the fact that the country was mostly compliant with the 40 recommendations of the FATF, called for an improved mechanism in 12 specific areas defined by the international authority. Since then, the Ministry of Financial Services and Good Governance as well as all relevant regulatory and enforcement authorities, worked towards an improved compliance to the FATF recommendations.

Prior to the September 2018 report, Mauritius reassessed its legal arsenal and brought a number of amendments to the Anti-Money Laundering / Combatting the Financing of Terrorism (AML/CFT) framework in the Finance (Miscellaneous Provisions) Act 2008. In addition to this, the Financial Intelligence and Anti-Money Laundering Regulations 2018 have been promulgated to address the requirements of the FATF.

“The efforts made by Mauritius to improve its level of commitment towards the international movement to combat money laundering and illicit flows has been lauded by international bodies, including the Council of Ministers of the ESAAMLG. The April 2019 mutual evaluation report can be deemed as yet another testament to our ongoing pursuit to comply with international standards. We have clearly stated our vision to make the Mauritius International Financial Centre one of the main pillars of economic growth and to achieve this, we cannot jeopardise our reputation as a secure, safe, transparent destination that is fully compliant with international standards and regulations,” says Minister of Financial Services and Good Governance Sudhir Sesungkur.

Following the changes made in the legislative framework, Mauritius has submitted to the ESAAMLG secretariat a first application for a technical compliance rerating on 12 recommendations, among which 10 have been successfully upgraded from Non-Compliant or Partially Compliant to Largely Compliant and one from Non-Compliant to Partially Compliant. Thus, the country’s rating, as per the norms and standards of the FATF, has been successfully upgraded from Non-Compliant to Largely Compliant. Meanwhile, Mauritian authorities have applied for the technical compliance rerating of other FATF recommendations which will be considered at the ESAAMLG meeting scheduled for September 2019.

“This upgrade in the technical compliance ratings clearly demonstrates that Mauritius as International Financial Centre of repute and substance, continuously reinforces its legislative mechanisms to give more comfort to the international investing community and stakeholders in both the banking and the non-banking sectors. I am also pleased to report that the ESAAMLG Secretariat acknowledges the significant efforts and progress made by Mauritius in addressing the technical compliance issues,” adds Minister Sesungkur.

About ESAAMLG

The purpose of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) is to combat money laundering by implementing the FATF recommendations. This effort includes coordinating with other international organisations concerned with combating money laundering, studying emerging regional typologies, developing institutional and human resource capacities to deal with these issues, and co-ordinating technical assistance where necessary. ESAAMLG enables regional factors to be taken into account in the implementation of anti-money laundering measures.

ESAAMLG was launched at a meeting of Ministers and high-level representatives in Tanzania in August 1999. A memorandum of understanding (MoU) based on the experience of the FATF and other FATFstyle regional bodies was agreed to at that meeting. Following the signature of the MoU by seven of the potential members, including Mauritius, ESAAMLG came into formal existence. All members are Commonwealth countries which have committed to the FATF Forty Recommendations. The group held its first meeting on 17-19 April 2000 in Dar es Salaam, Tanzania. Following the events of 11 September 2001, ESAAMLG expanded its scope to include the countering of terrorist financing.

ESAAMLG members participate in a self-assessment process to assess their progress in implementing the FATF Forty Recommendations. ESAAMLG became an Associate Member of the FATF in June 2010.

18th April 2019.

Mauritius: Employment Of Non-Citizens (Spouses)

The Non-Citizens (Employment Restriction) Exemptions Regulations had been amended on 21 and 28 March 2019 respectively to the effect that foreigners who were married to Mauritian citizens would have had to apply for a permit should they have been working or intended to work in Mauritius.

Further to representations made, the amendments published on 28 March 2019 through GN 55 of 2019 have now been repealed and have been replaced by amendments of GN 68 of 2019, effective as of 15 April 2019. Accordingly, non-citizens referred to in Paragraph 1 who were working prior to the 8th March 2019 will continue to be exempted from the requirements of a permit.

However, an employer who, with effect from or any time after 8 March 2019, has in his employment a non-citizen who is either spouse of a citizen of Mauritius and/or, until remarriage, a surviving spouse of a citizen of Mauritius, may, for a period of 3 months after the coming into operation of these regulations, have the non-citizen in his employment without there being in force a permit in respect of the non-citizen. The employer of the non-citizen who intends to continue to have the non-citizen in his employment must, within a period of 3 months after the coming into operation of these regulations, apply and obtain a permit in respect of the non-citizen under the Non-Citizens (Employment Restriction) (Work Permit) Regulations 2017.

The Guidelines for application will be available shortly for consultation at empment.labour.govmu.org

For any query or additional information, the Ministry may be reached on phone number 4050132.

Ministry of Labour, IR, Employment and Training

17 April 2019

When is a tax treaty not a treaty?

The High Court of Kenya gave judgement on 15 March 2019 on a challenge to the validity of the Kenyan-Mauritius double tax treaty in Tax Justice Network- Africa v Kenya Revenue Authority and others.  The petitioners had sought a declaration that the treaty had not been subjected to the ratification of domestic law and the Kenyan constitution and the legal notice giving the treaty effect under Kenyan law was invalid. The case raises three distinct issues in treaty making...

Kluwer International Tax Blog

Raconteur: The Business Transformation 2019

Transformation can no longer be seen as a one-off project, for organisations to survive, it must become the new normal. The Business Transformation report, published in The Times explores why this requires a sea-change in both managerial mindset and company culture. Taking the lead from startups, businesses must embrace agility, introduce “teamship” training to their programme and be sure to select the right leaders to oversee change. Also covered is a case study on how a small smelting firm transformed their business model to become a cutting-edge urban miner, and an infographic with key cultural pointers to watch out for during digital transformation.

FSC Mauritius: Guidance Note on Securities Token Offerings

This Guidance Note, the second in the Fintech Series, issued under section 7(1)(a) of the Financial Services Act 2007, highlights the regulatory approach of the FSC in relation to STOs.

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Mauritius: Legal Information Retrieval System

The Legal Information Retrieval System contains judgments of the Supreme Court of Mauritius for the years 1968-2017 (50 years).

Wolters Kluwer: Technology is Key to the Future Ready Lawyer

Faced with increasing information complexity, changing client demands and shifting market forces, legal professionals are turning to technology to help them achieve better outcomes. However, not all lawyers are doing so at the same pace, and those already leveraging technology have an early adopter advantage, including higher profitability and readiness to take on change, according to the findings of the 2019 Future Ready Lawyer Survey from Wolters Kluwer Legal & Regulatory.

“After years of debate about the transformation of the legal sector – if, when and how it would happen – there’s no question that the global future of law is rapidly underway, and that technology is a key force for change,” said Stacey Caywood, CEO, Wolters Kluwer Legal & Regulatory. “Legal professionals are increasingly turning to accessible and impactful technologies that help them achieve better outcomes and offer higher value through data-driven analytics and insights, and higher efficiency and productivity.”

The independently conducted survey of 700 lawyers from Europe and the U.S. focused on three core areas and asked lawyers to assess their current state and future priorities and preparedness to identify what it will take to be future ready in the areas of: Tools & Technology; Client Needs & Expectations; and Organization & Talent.

Across these categories, the Survey found significant differences between those organizations already optimizing technology, with plans to invest in new technologies (Technology Leaders), and those with limited use today with plans to leverage technology to a greater extent ahead (Transitioning organizations). Detailed findings are available in the Survey report.

Preparing for Change

Lawyers foresee pressure from a series of trends they expect to impact their organizations over the next three years. The top five trends expected to have the most impact according to the Future Ready Lawyer Survey are:

• Coping with increased volume and complexity of information (72% report expected impact);
• Emphasis on improved efficiency and productivity (71%);
• Understanding which legal technologies deliver the highest value (69%);
• Meeting changing client and leader expectations (68%); and
• Financial issues including greater price competition, alternative fee structures and cost containment pressures (68%).

Yet, there’s a concerning gap between these near-term forces and readiness to manage them. Fewer than one-third of lawyers report their organizations overall are very prepared to address any one of these trends.

In fact, while “Coping with increased volume and complexity of information” is a concern for 72% of lawyers, only 31% indicate their organization is very prepared to address it. Next, 71% of lawyers say “Emphasis on improved efficiency and productivity” will impact their organization, but only 31% are very prepared to respond.

Other key findings of the Future Ready Lawyer Survey include:

• About one-third of lawyers overall (34%) believe their organization is very prepared to keep pace with changes in the legal market. Technology Leading organizations, however, fare better, with 50% very prepared to keep up with expected changes, compared to just 19% of Transitioning organizations.
• 53% of lawyers indicate their organization’s technology investment will increase over the next three years, with Technology Leaders most likely to report increased future investments in technology. Technology Leading firms also report being more profitable.
• The Lack of Technology Knowledge, Understanding or Skills comprise the top category of reasons for resisting new technology (36%), followed by Organizational issues (34%) and Financial matters (30%).
• Across both Europe and the U.S., lawyers in law firms and legal departments agree that the two greatest areas of change in how firms and law departments deliver service will be related to Greater use of technology and Greater specialization.
• Top criteria law firms say they will be evaluated on moving ahead include: Ability to understand and partner with clients; Pricing; and Specialization.
• Top challenges for corporate legal departments are: Reducing and controlling outside legal costs; Improving case and contract management; and Automating routine tasks and leveraging technology in work processes.

“The Survey indicates the future of law is truly global, with many similar findings across the U.S. and Europe and even types of organizations,” said Caywood. “While some differences were found based on specific geography or organization type, the most significant differences overall were reported between Technology Leaders and those Transitioning and Trailing organizations still not leveraging technology effectively.”

Acceleration of Tech Adoption: Transformational Technologies

The Future Ready Lawyer Survey from Wolters Kluwer also examined the technologies lawyers are using today and plan to implement over the next three years. The number of organizations using transformational technologies, including artificial intelligence (AI), predictive analytics, machine learning, blockchain, smart contracts and decision support tools, is expected to approximately double by 2022, according to the report. Technology Leaders expect to embrace these technologies at a higher rate than Transitioning organizations, across the board.

There’s a gap, however, in understanding the benefits of new technology, and expected impact. More than one-half of lawyers expect to see some impact from transformational technologies over the next three years – but fewer than 24% say they understand them very well. As may be expected, millennials score higher in both forecasting the impact of these new technologies and understanding how they can be used.

In addition to the Survey findings on trends, technologies, and change, the Future Ready Lawyer report also includes insights from legal industry luminaries in the U.S. and Europe.

Christopher Saul Associates: ESG - The Challenge for PLCs

Environmental, Social and Governance (ESG) issues are highly topical for PLCs but they are complex and impressionistic and there is a real lack of clarity and consistency as to how best to address them.

The article discusses:

• the approach of investors - they are increasingly focussed on ESG and yet their interest will often come via “stewardship officers” rather than portfolio managers and thus not necessarily be seen by the corporates as integral to the value analysis. Activists, moreover, will be more interested in the short term than the long term and activist funds are increasingly distracting for PLC boards;
• the approach of the corporates themselves - some are thoughtful about the integration of ESG into the overall business strategy and risk analysis, and disclosure in the area is often impressive, but for many ESG still sits in a “sustainability cul-de-sac”; and
• ESG Ratings - which confuse rather than clarify

and presumes to offer some ideas in answer to the question “What to do?”

FSC Mauritius: Appointment of Mrs Renu Audit as Director of Authorisation and Supervision

The Financial Services Commission, Mauritius (FSC) is pleased to announce the recent appointment of Mrs Renu Audit as Director of Authorisation and Supervision.

Mrs Audit is a lawyer by training with more than 25 years of experience in commercial, corporate and financial services regulatory environment across jurisdictions like India, UK and Mauritius. Over last two decades, she has gained extensive know-how of financial regulations and of business conduct in Mauritius for having worked both with regulatory agencies and private sector in Mauritius. In her career, Mrs Audit has actively been involved in leadership roles and participated in various senior level delegations, national committees and international forums. She has actively contributed in industry initiatives, governmental taskforce and participated in conferences, workshops in issues relating to Anti-Bribery and Corruption, Gender Diversity, FATCA and RegTech.

Mrs Audit started her career as practising advocate before the Supreme Court of India prior to the joining FSC (then MOBAA) where she headed the Legal and Enforcement cluster, thus gaining extensive knowledge of the supervisory and legal framework in the financial services sector. She also held the position of Group Legal Counsel of a leading financial services (listed) conglomerate in Mauritius whereby she, in her senior executive role, was actively engaged in the execution of various corporate and regulatory projects and gained practical know-how of doing business and dealing with stakeholders. She more recently joined Dentons Mauritius, a leading Global Law Firm, where her main focus was on Private Equity, Mergers and Acquisitions, Corporate Governance and Capital Market.

Mrs Audit is admitted to Mauritius and Indian Bar. She also holds qualifications in International Trust management, Financial management, Oxford Fintech programme amongst others.

02 April 2019