Mauritius: Financial Services (Consolidated Licensing and Fees) (Amendment) Rules 2011

FSC Rules made by the Financial Services Commission under Section 93 of the Financial Services Act 2007

Corporate and Trust Service Provider
Code	Licence/Approval	Relevant Section of FSA 2007	Processing Fee (US$)	Annual Fee (US$)
FS-3.1A	Management Licence	S77	500	5,000
FS-3.1B	Management Licence (Qualified / Corporate Trustee only)	S77	500	5,000
Global Business Licence
F.S-4.1	Category 1 Global Business Licence	S72	500	1,750
F.S-4.2	Category 2 Global Business Licence	S72	100	235*

* This amount excludes the annual registration fee of $65, or such other fee as the Registrar of Companies may determine, payable to the Registrar of Companies.

First Annual Licence Fee
Months in which application is made	GBC 1 (US$)	GBC 2 (US$)	Nominee (US$)	Management Licence (US$)
July - September	1,750	235	350	5,000
October – December	1,315	175	265	3,750
January – March	875	120	175	2,500
April - June	440	60	90	1,250

Charges

Description	Fees and Charges Payable for US$
If Annual fee paid on	GBC 1	GBC 2
Due Date	1,750	235
Within 1 month after due date	1,925	260
After 1 month, but within 3 months after due date	2,190	300
After 3 months, but within 6 months after due date	2,625	350
After 6 months, but within 12 months after due date	3,500	470

These Rules shall come into operation on 01 January 2012.

Made by the Financial Services Commission on 21 November 2011.

UK: Independent study on general anti-avoidance rule published

Graham Aaronson QC has today set out his recommendation to the Government for the introduction to the UK tax system of a narrowly focused general anti-abuse rule (GAAR).

The recommendation is published in the final report of Mr Aaronson’s eleven month review of the feasibility for the UK tax system of a GAAR. With the advice of a committee of tax experts, he has concluded that introducing a narrowly-focused GAAR would:

• deter abusive tax avoidance schemes;
• contribute to providing a more level playing field for business;
• reduce legal uncertainty around tax avoidance schemes;
• help build trust between taxpayers and Her Majesty’s Revenue and Customs (HMRC); and
• offer opportunities to simplify the tax system.

However, it warns against the introduction of a broad spectrum general anti-avoidance rule.

The report recommends that a GAAR should initially apply to the main direct taxes – income tax, capital gains tax, corporation tax, and petroleum revenue tax, as well as national insurance contributions. It sets out in detail how a GAAR could be introduced, and includes an illustrative draft rule. It also includes a summary of the views of representative bodies in the tax sector.

Speaking in response to the publication of the review’s recommendations, David Gauke, Exchequer Secretary to the Treasury, said:

“The Government is committed to tackling tax avoidance. We asked Graham Aaronson to consider whether a UK GAAR could deter and counter tax avoidance, while providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs for businesses and HMRC. We welcome the completion of his study and will carefully consider its recommendations against these criteria, alongside the feedback from businesses and tax professionals that we look forward to receiving.”

Publishing the report, Graham Aaronson QC said:

“Responsible tax planning is an essential feature in a complex tax regime, such as the UK’s. But artificial and abusive tax avoidance schemes are widely regarded as an intolerable assault on the integrity of the tax regime. A general anti-abuse rule narrowly targeted to deter such schemes, while not affecting responsible tax planning, should lead to a fairer, more principled and ultimately simpler tax system; and I strongly recommend that such a rule should be introduced into our tax laws.”

The Government will consider the report in detail and the extent to which the proposals could add to HMRC’s existing legislative and administrative approaches and further reduce levels of tax avoidance. The Government will discuss the implications of the proposed rule with business and tax practitioners and respond fully at Budget 2012, setting out its plans for further, formal public consultation, if appropriate.

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Latest EU report on Funds Directive is positive for Jersey

Jersey Finance says it is encouraged by the contents of the European Securities and Markets Authority (ESMA) report on the Alternative Investment Fund Managers Directive (AIFMD) which was published last week and contains its final recommendations to the European Commission.

There has been a change in the wording between the earlier draft and the final report in one important aspect in respect of ‘third countries’, the term used to describe jurisdictions outside of the EU. Though the regulatory standards remain high and robust, the change is positive for ‘third countries’ since it makes it less onerous to achieve compliance. The Directive will require supervisory co-operation and exchange of information agreements between the authorities of EU member states and non EU countries.

Heather Bestwick, Technical Director of Jersey Finance, comments:

‘It is broadly positive throughout and Jersey remains on track to meet the criteria necessary for the funds industry to continue to participate when the new EU regime for funds is implemented. We are studying the detail but our first impressions are that there is nothing new in ESMA’s final report to give us concern.

‘Naturally there is still considerable work to do but it remains our intention to offer investors an ‘opt in’ AIFMD compliant regime while retaining flexibility for managers whose primary source of institutional capital is outside of Europe.’

EMSA’s latest document is the final technical recommendations to the European Commission who are expected to prepare the implementing measures on the basis of the report’s advice.

Seychelles: Technological Innovation Changes Driving Financial Services

Central Bank Anniversary Lecture

“Technological Innovation Changes Driving Financial Services”

Opening Address by President James A Michel

18 November 2011

Governor of the Central Bank,

Mr. Arun Jain, Chairman and CEO of Polaris Software Lab,

Your Excellencies,

Distinguished guests,

Ladies and Gentlemen,

The theme, “Technological Innovation driving Financial Services”, chosen by the Central Bank to mark its seventeenth anniversary is both timely and opportune. Like many of you I have followed with much interest the fascinating innovations that have occurred over the years in the development of financial services, as a result of technological advances.

Our economy has made tremendous progress in recent times despite or, perhaps, because of, the enormous challenges that we have faced. My Government and the Central Bank have made significant strides to improve the regulatory framework in which financial institutions operate. We will continue to ensure that our institutional and legal frameworks remain up to date with the financial innovations.

I have no doubt that all of you present here today share my appreciation of how important the financial sector is to our economy. In Seychelles this sector directly contributes 4.2 per cent to Gross Domestic Product. This makes it one of the key sectors of the economy after tourism and fisheries. The sector today employs over 1,100 persons, that is, 2.4 per cent of Seychelles’ workforce. Tax revenue from the sector in 2010 amounted to R137 million, which was 17 per cent of total tax revenue. These are not insignificant.

Ladies and gentlemen, in this day and age everything revolves around technological innovations. Failure by any business or market player to appreciate this fact is at their own peril. We have all witnessed, time after time, how long-established, reputable businesses have been left behind or failed by virtue of being too slow to grasp the benefits of financial innovation. Fully aware of this, a number of recent ventures and enterprises in Seychelles have shown acumen by better adapting to technological advances.

I applaud the efforts of our public institutions which have grasped technological changes, and which have already brought about significant improvements in the delivery of their services. On the occasion of its anniversary lecture, I take the opportunity to congratulate the Central Bank for being one of our institutions that has adopted technological advances to its benefit. The recent investment of the CBS in its integrated CORE banking platform was a major breakthrough for the Bank. This solution has allowed the Bank to, among other things, increase the volume of transactions it processes, reduce risks associated with a multitude of computer software, minimize security risks, provide real-time balances to Government and commercial banks, and enable “straight-through” processing. I also note with encouragement the various forthcoming projects envisaged by the Bank, including very shortly, its initiative for the automation of cheque clearing, which will mean that the exchange of paper cheques between banks for the settlement of personal and business transactions will soon be a thing of the past.

Today, I also want to recognize the significant contribution that financial institutions, in particular commercial banks, have made and continue to make to our economy. However, when it comes to innovation I cannot say that I am satisfied with what the institutions are offering to their clients. For instance, today not one single bank in Seychelles offers full Internet banking services to their clients! This is unacceptable in this day and age. I am encouraged, however, that some of our banks have indicated that this will be forthcoming. I hope that this will happen sooner rather than later.

I want to take this opportunity to appeal to our financial institutions, especially the commercial banks to do more to help our economy. We, as a nation, are becoming more sophisticated by the day, and the level of services that banks provide is, frankly, not up to expectations. When we ask foreign investors to come to our shores we want quality investors, but they will turn their backs on us if the quality of services that our banks provide are not up to standard. With technological advances the tools are there to improve the quality of services. But having said that nothing can replace the human touch. This is why, as much as we want to promote technology in banking services, banks need to keep investing in their human capital.

Ladies and gentlemen, technological innovation presents us with many challenges but also with exciting and rewarding opportunities. Let us make the most of the great opportunities at hand. They will be significantly enhanced when Seychelles’ submarine cable becomes operational next year. It will provide a major boost to our country’s endeavour to improve our communications capability. The submarine cable will bring Seychelles so much closer to financial innovations through a significant increase in Internet access and speed and higher volumes of e-commerce at substantially reduced costs. This project required significant resources both from Government and the private sector. It exemplifies the type of public-private partnership that is the hallmark of the New Seychelles. Like you all, I look forward eagerly to the completion of this project, and the benefits that it will bring to our country.

Ladies and gentlemen, as we focus on the subject of technological change and how it is driving financial innovation, the world financial system is in turmoil. As many countries, large and small, struggle to cope with the painful effects of this crisis, Seychelles, despite many challenges, remains resilient and continues to cope remarkably well. We have shown that having the right policies and right economic base firmly in place are the most effective tools in facing the harsh reality of such crises. I believe that, similarly, those businesses which invest wisely in technology and in human capital will be better placed to face the challenges of competition, market access, service delivery, sourcing etc. and will stand to gain most through financial innovation.

I cannot conclude without reiterating my wish for commercial banks to do more to develop our economy through provision of more credit, especially to small and medium-size enterprises. We have a duty to empower our people. We have a duty to help them better their situation, to do business, expand and create more wealth, more opportunities… But they cannot do so without access to affordable credit. Credit remains one of the fundamental drivers of economic growth. Banks can and must reduce interest rates further. Bank spreads today are higher than they were before we implemented our economic reforms three years ago, one of the only few black spots when we look at our overall performance during that period. So I urge banks, once again, to go back to the drawing board and contribute more to our economy through more affordable lending rates. At the same time let us do more to encourage the savings culture through more attractive savings rates.

Ladies and gentlemen, technological innovation is one of the best things that happened to mankind, and we have to make the most of it. We are part of the process. We have to own it and drive it. We have to be forward-looking – a nation on the march to progress. We cannot afford to be complacent – we have to accept and adopt innovation. It is the key to our survival and progress as a nation.

I thank you and wish you fruitful deliberations.

Jersey FSC Consultation on Changes to Customer Due Diligence Measures

Today, the Jersey Financial Services Commission (the “Commission”) has issued a Consultation Paper on proposals to amend some specific provisions in the Money Laundering (Jersey) Order 2008 (the “Money Laundering Order”) and AML/CFT Handbook for regulated financial services business (the “AML/CFT Handbook”) that deal with customer due diligence measures.

The Paper has been published ahead of a wider review of the basis for, and scope of, customer due diligence concessions in the Money Laundering Order that will take account of the imminent revision to international standards set by the Financial Action Task Force.

Amongst other things, proposals in the Paper will:

• Clarify the additional customer due diligence measures that must be taken when a relationship with a customer is established remotely - where the customer is not seen - and money laundering and terrorist financing risk is considered to be higher than the norm.
• Provide additional guidance on identifying countries which may be considered to present a higher risk of money laundering or terrorist financing.
• Specify some additional due diligence measures to be applied where a customer has a connection to Iran or North Korea, and where a customer is considered to present a higher risk as a result of a connection to Bolivia, Burma (Myanmar) Cuba, Ethiopia, Kenya, Nigeria, São Tomé & Príncipe, Sri Lanka, Syria and Turkey.
• Extend the circumstances in which it may be appropriate to simplify customer due diligence measures because the risk of money laundering or terrorist financing occurring is considered to be less for a particular customer, product or service.

Sanlam buys stake in Summit Trust Geneva

Summit Trust International SA, a leading international trust group based in Geneva with subsidiaries in England, New Zealand and Cayman Islands, has sold a 65% interest in the company to Sanlam, the South African insurance group.

Summit Trust was originally incorporated in September 1999 as Close Trustees (Switzerland) SA when it was formed as a joint venture company between Close Brothers Group plc and the Geneva management team. The company changed its name to Summit Trust International when management bought out the remaining minority interest from Close Brothers Group earlier this year.

Sanlam Limited is a leading financial services group in South Africa listed on the Johannesburg Stock Exchange, with a market capital of €6 billion. In their over 90 years of existence Sanlam has shown themselves to be an innovator and leader in many aspects of financial services in South Africa. Over the last couple of years the group has also set up operations in Africa, Europe, India, Australia and the USA. Summit Trust International will become part of Sanlam Private Investments, the wealth management and private client business within the Sanlam Group, which currently operates in South Africa, the UK and Australia.

Daniël Kriel, CEO of SPI, says Summit was identified as an appropriate acquisition after an extensive search for the right partner to offer SPI clients offshore fiduciary services. “Summit Trust is an exceptional, owner-managed business with a reputation for excellence and a solid client base. Effective 1 November, this acquisition provides a critical building block in our total wealth management offering, a shortcoming until now.”

Kriel says he is excited about the increased opportunities Summit opens up for SPI’s clients. “The fiduciary and tax needs of high net worth individuals and their families are increasingly complex; we are confident the additional resources this business brings in terms of offshore capability will be of enormous relevance and advantage to our clients. Our expanded global wealth management proposition will serve our South African client base, and SPI clients in the UK and Australia.”

Daniel Martineau, Executive Chairman of Summit Trust International Group says he believes this to be a very exciting opportunity that has come at the right time for them and their international client base. “The management team who will retain a 35% stake in the business, is committed to the business in the longer term and will be looking for opportunities to sensibly expand our services and footprint into other jurisdictions. We are also looking forward to offering our well established services to SPI’s client base.”

KPMG - IFRS for investment funds: Presentation and measurement of financial assets carried at fair value

This issue covers the presentation and measurement of financial assets carried at fair value.

India: AAR orders capital gains exemption for Ardex Investment

The Authority for Advance Rulings (AAR) in the case of Ardex Investments Mauritius Ltd. (the applicant) held that capital gains on the proposed sale of shares of an Indian company to the foreign company is not chargeable to tax in India in view of Article 13(4) of the India-Mauritius tax treaty.

Mauritius - Budget 2012 Highlights: Boosting investment & growth & stimulating financial services

To provide leadership in investment and job creation against a background of crisis, the 2012 Budget provides for the setting up of a Resilience Plan for the next three years. It will cover all enterprises with focus on SMEs, infrastructure development and job creation. The main strategies of the Resilience Plan are:

• Supporting Enterprises at the Microeconomic Level. This will involve the creation of a National Resilience Fund (NRF) of Rs 7.3 billion that will be used both as a contingency fund to strengthen the resilience of the economy and as a rainy day fund to shore up public finances.
• More Government Spending on Infrastructure. Some Rs 21.2 billion will be injected in the economy for key infrastructure projects and as a lever to increase investment, employment and growth during the crisis.
• Financial System Stability. Measures will be based on IMF recommendations on how to ensure a well-coordinated watch on the stability of our financial system.
• Coherent Macroeconomic Response. It aims at implementing mechanisms to ensure coherence in fiscal and monetary policies.

Tax reforms

The 2012 Budget also makes provision for reforms in tax policies in order to promote investment. These changes include:

• The abolition of the solidarity tax on dividends and interest.
• The abolition of the capital gains tax on immovable property.
• The abolition of the municipal tenant’s tax. Government will disburse some Rs 175 million rupees per year to the municipalities as compensation for the revenue foregone.
• The removal of land transfer tax on the sale of immovable property by financial institutions relating to debt recovery.
• The environment protection fee to be levied only on hotels, guest houses and tourist residences that obtain profits.
• The tax holiday of Freeport operators to be carried forward indefinitely.

Financial services

In a bid to stimulate the sector, the 2012 Budget proposes strong support to the financial services industry to weave new business links with the rest of the world, comply fully with international norms and diversify its products. To this end, a legal framework to promote Foundations, Private Occupational Pensions and new concepts of Trusts will be set out. These aim at significantly widening the spectrum of financial vehicles in our jurisdiction.

Seychelles committed to applying OECD rules but asks for fairness in international taxation regulations

The following is a statement issued yesterday by the Minister for Foreign Affairs, Jean-Paul Adam:

“Following the recent move by the G20 to publish a list of suspected tax havens, among which Seychelles is named, the government of Seychelles wishes to re-iterate its unwavering commitment and engagement to implementing internationally agreed tax standards within local legislation.

“The government has been steadfast in its ongoing cooperation with the Organisation for Economic Co-operation and development (OECD) and while there are outstanding legislations to implement, this delay should in no way be construed as a lack of political will.

This delay has instead been due to the fact that Seychelles has had two national elections in 2011 and as such the National Assembly has had to contend with numerous interruptions.

“Throughout this entire process, the OECD has been kept fully abreast of the situation with full transparency, and as such the government feels that to be blindly condemned by the G20 is detrimental to the process.

“The government feels that the recent listing of countries deemed non-compliant only succeeds in diverting attention away from the larger issues; in order to achieve true fairness in taxation, it is imperative that the too often ignored fact that the majority of tax evasion is actually committed within OECD countries.

“It is easier to say that small jurisdictions must improve their legislation to be more compliant, something most are striving hard to do, but what is much harder to say is that there are a large number of influential companies already exploiting existing loopholes within OECD jurisdiction that need to be tackled.

“Small Island Developing States are faced with numerous well-known capacity challenges and constraints and we hope that the G20 will be more constructive in its reflections in the future. Despite the G20’s unequal approach, the government does in fact welcome more regulation on international taxation regimes when done in a fair and consistent manner.”

Worldwide tax reforms continue to encourage a return to growth and sustained revenuues

Governments continue to reform their tax systems, according to a new report by the World Bank, IFC, and PwC. In all, 123 out of 183 economies measured have made significant regulatory changes since 2006 to ease tax burdens for small and medium-sized firms, as governments seek to increase business registrations and relieve the impact of the global economic downturn.

Launched today, Paying Taxes 2012 finds that 33 economies made it easier and less costly to pay taxes from June 2010 through May 2011. The most common tax reform was the increased use of online systems to facilitate tax compliance, introduced in 23 economies. Electronic filing and payment reduces the amount of paperwork, allows a more targeted and risk based approach to audit and compliance, and can help eliminate corruption.

Paying Taxes 2012 measures all mandatory taxes and contributions that a medium-sized firm must pay in a given year. Taxes and contributions measured include the profit or corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, vehicle and road taxes, and other small taxes or fees.

The report found that the Total Tax Rate for small and medium-sized companies has fallen by 8.5 percentage points since 2006, more than one point per year. During that period, the time it takes to comply with business taxes declined by more than a day a year (54 hours), and the number of payments required dropped by five.

"The high number of reforms in tax administration shows that improving the tax system for businesses is high on the agenda for governments,” said Augusto Lopez Claros, Director, Global Indicators and Analysis, World Bank Group. “If they create a system that is easy to comply with, it is more likely that businesses will operate in the formal economy and provide a more sustainable source of revenue than debt or aid."

Globally, the average Total Tax Rate for a small to medium-sized company is now 44.8 percent of its commercial profit. Complying with tax regulations takes an average of 28.5 payments and a total of 277 hours.

"Governments have it in their control to develop tax systems that foster business investment and make the private sector an engine for a return to economic growth and prosperity," said Andrew Packman, a tax partner at PwC UK. "Reducing rates and making the compliance less burdensome helps companies focus on making their business grow.”

HSBCnet Mobile: Banking in the palm of your hand

Log on to www.hsbcnet.com/mobile from your supported mobile device

HSBC are pleased to introduce HSBCnet Mobile, a convenient new way to access a select set of HSBCnet services using your supported mobile device.

The streamlined interface has been specifically designed for use on certain mobile devices. Currently available as a complimentary value-added service, you can access HSBCnet Mobile using your device’s web browser – no applications or downloads are required.

Three features are available on HSBCnet Mobile in line with your entitlements:

• Checking account balances and statements
• Authorising payment instructions (Priority Payments, Inter-Account Transfers and ACH Credits/Debits only)
• Receive notification of payments requiring authorisation via My Alerts

Please note: a Security Device is required to access HSBCnet Mobile. HSBCnet Mobile is not available to Smart Card users. HSBCnet is currently in the process of upgrading Security Devices for our customers. If you have already been contacted to upgrade your Security Device, we encourage you to do so immediately in order to use HSBCnet Mobile. For more information, please review the resources in the Information Centre, available after logging on to the main HSBCnet site.

HSBCnet Mobile: supported devices
Device type	Operating system
Android	Android 2.2 and 2.3
iPhone	iOS 3 and iOS 4
BlackBerry	OS 5.0 and 6.0

About HSBCnet Mobile supported devices

HSBCnet has verified the compatibility of these mobile devices and operating systems for use with HSBCnet Mobile. Please note that HSBCnet functionality may perform normally using other operating systems, but compatibility cannot be confirmed at this time.

HSBCnet Mobile will support additional mobile devices in the future. For more information about your device, please refer to your user manual or contact the manufacturer for assistance.

Try HSBCnet Mobile for yourself today via your mobile device atwww.hsbcnet.com/mobile. For more information about how to use HSBCnet Mobile, refer to the training presentation or contact your HSBC representative. Once you have tried HSBCnet Mobile, please let us know what you think using our online survey. Your feedback is very important as we continue to improve the service and add additional features. These resources are also available after logging on to HSBCnet. ***Please note: These links will open in a separate window.

Maintaining a secure HSBCnet Mobile experience

As with the main HSBCnet site, HSBCnet Mobile has incorporated several key security measures to help protect your information:

• Security Device: Your Security Device is required to log on to your HSBCnet profile and for any subsequent transaction authorisations.
• Encryption: HSBCnet Mobile is encrypted using Secure Socket Layer (SSL) Encryption technology (SSL v3 – 128 bit).
• Session time-out: Similar to using HSBCnet from a computer, if you forget to log out, or your mobile device remains inactive for a period of time, HSBCnet Mobile will log out automatically.

In addition to your obligation to comply with the general HSBCnet Security Procedures, you must ensure you also comply with the additional security requirements* which are in relation to HSBCnet Mobile on your mobile device, and include:

• Do not store your HSBCnet user or profile details on your mobile device.
• Ensure your mobile device is updated with the latest anti-virus and anti-spyware software.
• Avoid sharing your mobile device with others.
• Avoid using other mobile devices not on the approved list to access HSBCnetMobile.
• Do not leave your mobile phone unattended after logging on to HSBCnet Mobile.
• For added peace of mind, click the ‘Logout’ button when you are finished with HSBCnet Mobile.
• To prevent unauthorised access to your mobile device, enable its automatic passcode lock feature.
• Use default browsers originally provided with your mobile device.
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• When connecting to a wireless network using your mobile device, use only trusted networks or service providers and enable additional security protection, such as Wi-Fi Protected Access (WPA), if possible.

For full details of your security obligations when using HSBCnet Mobile, please refer to the HSBCnet Security Procedures.

Paul|Weiss: IRS Proposes Favorable Changes to Sovereign Wealth Funds’ U.S. Tax Exemption

The IRS issued proposed regulations last week that will make it easier for sovereign wealth funds and other entities controlled by foreign governments to invest in private funds without jeopardizing their exemption from U.S. federal income taxation under Section 892 of the Code.

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Mauritius - Budget 2012: An Overview

“Growth for the greater good and seizing all opportunities to create more wealth for our country and a better life for all our citizens”, this in the words of the Vice-Prime Minister and Minister of Finance and Economic Development, Mr Xavier Luc Duval, is the underlying the philosophy of the 2012 budget. The budget was presented to the National Assembly on 4 November.

The budget outlines an intensive approach for export promotion and market development. Besides promoting the opening of the economy it also makes bold adjustments to tax policy which promotes rather than inhibits growth and social justice. The budget announces institutional reforms to further embed efficiency and good governance.

The economy is forecast to register a growth rate of 4 percent. The budget will raise revenue of Rs 76.9 billion of which Rs 16.4 billion from income taxes, Rs 44.4 billion from indirect taxes, and Rs 3.4 billion rupees from grants and other budget support.

Expenditure will amount to Rs 90.5 billion and as a result, the budget deficit for 2012 will be 3.8 percent of GDP. Government is reducing the public sector debt to GDP ratio to 54.1 percent in 2012 and is well on course to the 50 percent debt to GDP objective set in the law and to be achieved by 2018.

In a bid to boost Mauritius as a quality destination for foreign direct investment aggressive campaigns will be held in traditional markets in Europe and the USA. More focused promotion campaigns are scheduled in India, China, and Africa, where the potential is unfolding at a rapid pace.

As regard the internationalization of the economy two roving ambassadors will be appointed for Africa and the Indian Ocean. They will assist in widening the network of Double Taxation Avoidance Agreements and Investment Promotion and Protection Agreements with African states.

The budget makes provision to broaden the scope for investment at home by Government disinvesting from some of its commercial and industrial assets. The aim is three-fold: make better use of Government assets to generate wealth and employment, raise revenue to invest in new strategic sectors, and offer better facilities to the public.

A Resilience Plan has been designed for the next three years covering enterprises of all sizes with special focus on SMEs, infrastructure development and job creation. It is made up of four strategies: support enterprises at the microeconomic level; investments of Rs 21.2 billion for key infrastructure projects; further build up the stability of our financial system; and setting up of a necessary mechanism for determining, with the Bank of Mauritius, the accepted range of the rate of inflation.

“This is a Budget about making things happen. It is a credible plan to fight exclusion, combat absolute poverty, democratise the economy, create more jobs, bolster the confidence of businesses and set a strong base for sustainable development”, said Mr Xavier Duval.

G20: Tax Havens and Non-Cooperative Jurisdictions

Since 2008, the G20 has been the main political driving force behind action to counter tax havens and non-cooperative jurisdictions. The international conference held by France and Germany in October 2008 followed by the G20 Summit in London in 2009 marked a major milestone by stating for the first time that non-cooperative jurisdictions are a threat to the international financial system and our public finances. Three processes were set up (see details below) to objectively identify non-cooperative jurisdictions and urge them to comply with the international standards on transparency and information exchange.

The G20 in Cannes has fully reviewed these processes. This is an extremely tricky exercise as it calls for a collective judgment on certain extremely reluctant countries.

1. In tax matters, G20 action has prompted a first with the signing of a wave of over 700 tax information exchange agreements. The Global Forum (OECD body working on tax transparency and now counting 105 members) is responsible for checking that each country (i) has a legal framework for the exchange of information for tax purposes (phase 1 review) and (ii) that this legal framework is effective (phase 2 review). To date, 59 jurisdictions have been assessed. Full findings are detailed in the Global Forum’s public report, which identified 11 jurisdictions with serious shortcomings:

• Antigua and Barbuda, Barbados, Botswana, Brunei, Panama, Seychelles, Trinidad and Tobago, Uruguay, and Vanuatu do not have a suitable legal framework for the exchange of tax information and do not qualify for the phase 2 review;
• Switzerland and Liechtenstein do not qualify for phase 2 until they remedy certain deficiencies identified by the Global Forum;
• 24 other jurisdictions have a number of sizeable deficiencies, but are entitled to embark upon the phase 2 review: a further 16 present more minor failings, and eight countries have no shortcomings (including France).

The Global Forum’s assessments cover nearly 400 recommendations, intended for the jurisdictions to conduct the reforms required to increase their tax transparency. For example, Belgium has lifted its banking secrecy, the Cayman Islands have introduced new accounting obligations, and the British Virgin Islands have scaled up their tax administration’s powers. This is a long battle that we need to fight tirelessly if we are to obtain results.

Cannes has also rallied all the G20 countries to the multilateral convention on mutual administrative assistance in tax matters. This new convention is set to have a new knock-on effect, especially on developing countries, as it provides access to a tax information exchange network that includes the leading economies.

2. In financial regulation and supervision (banks, insurance and financial markets), the Financial Stability Board (FSB) is assessing the compliance of countries with international standards on cooperation and information exchange between supervisors. The FSB has already analyzed the situation of the 61 countries with the leading financial systems – including all the G20 members. The evaluations to date show that:

• 41 of the 61 countries evaluated satisfactorily apply the international standards;
• 18 are in an intermediate situation (either the assessment of one or more sectors has found shortcomings that are being corrected, or the assessment is incomplete or out of date, but the country is cooperating to bring itself into compliance);
• 2 countries, Libya (former authorities) and Venezuela, refused to talk to the FSB and are accordingly deemed non-cooperative jurisdictions. The FSB continues to seek dialogue with these authorities, but is also prepared to use countermeasures if necessary.

3. In action to counter money laundering and the financing of terrorism, the FATF has identified 12 jurisdictions whose strategic deficiencies constitute a threat to the international financial system and which the States are advised to take into account:

• Iran and North Korea present the most serious deficiencies and the FATF has explicitly called for countermeasures to be taken against these non-cooperative jurisdictions (“enhanced due diligence” procedures by the banks).
• Cuba, Bolivia, Ethiopia, Kenya, Myanmar, Nigeria, Sao Tomé & Principe, Sri Lanka, Syria, and Turkey have made what the FATF considers to be insufficient progress.

In a second document, the FATF lists the 28 countries with strategic deficiencies that have embarked upon a process to solve these deficiencies with the FATF.

In Cannes, the G20 countries have solemnly recommitted to promote compliance with the international tax and financial information exchange standards and to use all the countermeasures available to them to combat tax havens and non-cooperative jurisdictions that do not comply with these standards.

In tax matters, the countermeasures include tax penalties on counterparties in transactions with tax havens.

Taking this action forward, the G20 has called on the FATF and the OECD to step up their joint work on corporate and trust transparency in tax and money laundering matters.

G20 Cannes summit - Tackling tax havens and non-cooperative jurisdictions

We are committed to protect our public finances and the global financial system from the risks posed by tax havens and non cooperative jurisdictions. The damage caused is particularly important for the least developed countries. Today we reviewed progress made in the three following areas:

• In the tax area, the Global Forum has now 105 members. More than 700 information exchange agreements have been signed and the Global Forum is leading an extensive peer review process of the legal framework (phase 1) and implementation of standards (phase 2). We ask the Global Forum to complete the first round of phase 1 reviews and substantially advance the phase 2 reviews by the end of next year. We will review progress at our next Summit. Many of the 59 jurisdictions which have been reviewed by the Global Forum are fully or largely compliant or are making progress through the implementation of the 379 relevant recommendations. We urge all the jurisdictions to take the necessary action to tackle the deficiencies identified in the course of their reviews, in particular the 11 jurisdictions whose framework does not allow them at this stage to qualify to phase 2. We underline in particular the importance of comprehensive tax information exchange and encourage competent authorities to continue their work in the Global Forum to assess and better define the means to improve it. We welcome the commitment made by all of us to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and strongly encourage other jurisdictions to join this Convention. In this context, we will consider exchanging information automatically on a voluntary basis as appropriate and as provided for in the convention;
• In the prudential area, the FSB has led a process and published a statement to evaluate adherence to internationally agreed information exchange and cooperation standards. Out of 61 jurisdictions selected for their importance on several economic and financial indicators, we note with satisfaction that 41 jurisdictions have already demonstrated sufficiently strong adherence to these standards and that 18 others are committing to join them. We urge the identified non-cooperative jurisdictions to take the actions requested by the FSB;
• In the anti-money laundering and combating the financing of terrorism area, the FATF has recently published an updated list of jurisdictions with strategic deficiencies. We urge all jurisdictions and in particular those identified as not complying or making sufficient progress to strengthen their AML/CFT systems in cooperation with the FATF.

We urge all jurisdictions to adhere to the international standards in the tax, prudential and AML/CFT areas. We stand ready, if needed, to use our existing countermeasures to deal with jurisdictions which fail to meet these standards. The FATF, the Global Forum and other international organizations should work closely together to enhance transparency and facilitate cooperation between tax and law enforcement agencies in the implementation of these standards. We also call on FATF and OECD to do further work to prevent misuse of corporate vehicles.

Bedell Trust launches Bedell Management Services (Mauritius) Limited

Bedell Trust is strengthening its presence in Mauritius, widely recognised as an increasingly sophisticated international finance centre.

Bedell Management Services (Mauritius) Limited is a full service management company, providing corporate, trust and fund administration services. Its range of expertise complements the legal advice provided by Bedell Cristin (Mauritius) Partnership, which opened in November 2010 and has swiftly established itself in the region for its expertise in handling complex cross-border transactions.

Bedell Management Services (Mauritius) Limited will be led by Yuvraj Juwaheer, who has over 15 years’ experience in the global finance business sector. Yuvraj was a member of the Mauritian government steering committee set up in 2004 to consider opening the island to international law firms, and was an independent director on the board of a number of Indian funds. He and his team offer a potent combination of local knowledge and the wider, worldwide resources of Bedell.

“Mauritius is a key location for Bedell Trust. OECD ‘whitelist’ status recognises its adherence to best international financial standards, it benefits from many double tax treaties and is a politically stable base for investment into the attractive markets of India, Africa and the Far East,” says Yuvraj. “Bedell Trust’s clients have been showing a keen interest in the services we can provide from Mauritius.”

He adds that Bedell Trust’s worldwide recognition as a leader in its field opens many doors in the region.

Commenting on the opening of Bedell Management Services (Mauritius), Michael Richardson, Executive Chairman of Bedell Trust said, "Our strong presence in Mauritius is of great value to clients hoping to invest in South Africa, India and the Far East. Yuvraj’s extensive experience and unmatchable local network provide considerable benefits to our clients and to our business worldwide."

Selected, in 2011, for the Top 25 Most Admired Companies list compiled by Private Client Practitioner, Bedell Trust has recently been named Owner-Managed Trust Team of the Year in the STEP Private Client Awards 2011/12.

Mauritius Budget 2012 - Financial Services: the Linchpin of our Economy

The financial services industry will continue to be the linchpin of our economy. We have taken it to great heights of success. But we will not rest on our laurels. We will provide strong support to the financial services industry to weave new business links with the rest of the world, comply fully with international norms and diversify its products.

Legislation has already been passed to promote Limited Partnerships.

We will soon set out the legal framework to promote:

1. Foundations;
2. Private Occupational Pensions; and
3. New concepts of Trusts.

These should significantly widen the spectrum of financial vehicles in our jurisdiction.

The Government of Mauritius will continue to protect our country’s best interest with regards to the India/Mauritius Double Taxation Avoidance Agreement.

The ‘Code Civil Mauricien’ will be amended to provide for an appropriate legal framework which would govern leasing of both immovable and movable property, especially finance leasing.

As regards the insurance sector, we are abrogating legislation that would have allowed local assets to be insured with an insurance company based in a foreign country in 2013.

A solidarity levy will cover Management Companies in the Global Business Sector. The levy will be 10 percent of chargeable income and will be applicable for 2 years ending in 2013.

Ogier - Inaugural IFC Forum Conference

Nick Kershaw, Ogier Group CEO, chaired the first high-level policy conference, International Financial Centres: Sharing Perspectives and Meeting the Challenges organised by The Commonwealth Secretariat and the IFC Forum on 20th and 21st October in London.

The event examined the role of small international financial centres (IFCs) in the global economy and included perspectives from the OECD, governments, business leaders, respected academics and the media. The conference called on the OECD and G20 to adopt a more constructive approach to dealing with small International Financial Centres, which included securing a commitment to work in a more collaborative partnership and the adoption of a more balanced tone which drops the use of words like tax haven.

The IFC Forum was created in 2009 against a backdrop of a world that was becoming increasingly hostile and aggressive towards small international financial centres. It was formed with the purpose of providing policymakers with authoritative and balanced information on the vital role that IFCs play in the global economy and thereby counteracting the negative sentiments which were increasingly gaining traction.

One of the major themes which emerged during the conference was the need for much closer cooperation and partnership between the private and public sector in pressing the case with multi-lateral organisations, including the OECD and G20, for small-state IFCs to continue to operate in the global economy.

Nick Kershaw said "The IFC Forum has played a valuable role in communicating the positive contribution that IFCs make to the world's economy. This conference set out to address another vital element which is that IFCs need to work together in getting their message across and influencing policymakers."

Colin Powell, Adviser - International Affairs, Chief Minister's Department, States of Jersey, spoke at the conference on Technical Assistance and Capacity Building: Challenges facing IFCs. His speech looked at the role IFCs can play in helping with standard setting and compliance assessment, and in helping developing countries build up their domestic and international capacity. Colin Powell said, "The conference was very productive in presenting ways that IFCs working together can influence attitudes particularly through their positive and constructive participation in the relevant international initiatives."

Nick Kershaw said "The IFC Forum will continue to press its case that islands such as Jersey represent a major boon to the global economy in allowing international trade, economic growth and prosperity to increase. At the current time of great economic and financial uncertainty, particularly with Europe’s sovereign debt crisis looming ever larger, it is important that the world’s major economies do not penalise us, with measures which reduce market liquidity and investment, killing off any hopes of economic recovery. As the IFC Forum’s conference in London clearly demonstrated, there is a growing consensus emerging across the private and public sector towards greater partnership and cooperation in addressing these issues.”

The conference was attended by over 120 delegates. This included representatives from the private sector as well as a number of small-state IFC governments including Anguilla, The British Virgin Islands, Barbados, Bermuda, Cayman, The Cook Islands, The Bahamas, Grenada, Guernsey, The Isle of Man, Jersey, Samoa, The Seychelles and St Lucia. The conference was organised in partnership with the Commonwealth Secretariat to discuss the themes of developing global regulatory standards, promoting global prosperity through trade and international finance, as well boosting growth, employment and investment returns in the world’s major economies.

‘International Perception of Asia as a Low-Cost Financial Centre Inaccurate’ – STEP Report

The findings of a report released today by the Society of Trust and Estate Practitioners (STEP) contradict the perception that East Asia is the low cost centre that many in Europe believe it to be.

The findings that emerge from the report, published during this week’s STEP Asia Conference in Singapore, both confirm and contradict several widely held external perceptions about trust and estate practice in East Asia. As the newest and fastest growing region in the world for wealth planning, the report provides useful insight into differences with more established International Financial Centres as well as fresh input into the long running debate on Hong Kong vs Singapore as rival centres of private client wealth management.

The impact of China as a force for change remains hotly debated as does the assertion that increasing regulatory initiatives – especially tax compliance – will make practitioners’ lives more difficult.

STEP Chief Executive David Harvey said: “The picture that emerges from this research is of an industry confidently taking its own path of development into a future that is both similar to, and quite different from, the route followed by more established International Financial Centres.”

The report can be viewed online here

Jersey Finance: TIEA with India is a welcome development

The signing of the Tax Information Exchange Agreement (TIEA) with India is a welcome development in Jersey’s progress in establishing closer commercial ties with the country.

Geoff Cook, chief executive, Jersey Finance Limited, commented:

‘For the last five years or so Jersey Finance has been building its links with India by hosting visits in which we showcase our services and highlight the quality of our regulatory regime. Senior politicians and regulators have joined us on some of our trips to meet formally with Government officials and regulators in India. Earlier this year, Jersey Finance cemented its presence further by appointing representatives in both Mumbai and Delhi.

The signing of the TIEA is a boost to that growing commercial relationship and from an industry perspective gives further confidence to practitioners in both Jersey and India that there is mutual recognition about the quality of the standards of compliance and co-operation between regulators and tax authorities.’

Jersey remains well placed to provide the investment vehicles to conduit international capital into India for the infrastructure projects it undertakes. It possesses similar company entities to enable Indian businesses to expand internationally and access capital on foreign exchanges, including the London Stock Exchange and it has investment structures which are ideal for servicing the needs of the growing high net worth sector in India.

Companies from emerging giants China and Russia most likely to bribe abroad

Bribing public officials when doing business abroad is a regular occurrence, according to a survey of 3,000 business executives from developed and developing countries.

Transparency International’s 2011 Bribe Payers Index, released today, ranks 28 leading international and regional exporting countries by the likelihood of their firms to bribe abroad. Companies from Russia and China, who invested US $120 billion overseas in 2010, are seen as most likely to pay bribes abroad. Companies from the Netherlands and Switzerland are seen as least likely to bribe.

Addressing foreign bribery is a priority issue for the international community. A year ago the group of 20 leading economies (G20) committed to tackling foreign bribery by launching an anti-corruption action plan. The progress report of the working group monitoring the action plan, which G20 leaders are expected to approve at tomorrow’s Cannes summit, will recognise steps taken by G20 countries China, Russia, Indonesia and India in criminalising foreign bribery. Transparency International welcomes the report and calls for swift implementation of the further anti-corruption measures that it calls for.

“In their meeting in Cannes this week, G20 governments must tackle foreign bribery as a matter of urgency. New legislation in G20 countries is an opportunity to provide a fairer, more open global economy that creates the conditions for sustainable recovery and the stability of future growth. Governments can press home the advances made by putting resources behind investigations and prosecutions of foreign bribery, so that there is a very real deterrent to unethical and illegal behaviour,” said Transparency International Chair, Huguette Labelle.

THE IMPACT OF BRIBERY

In the survey, international business leaders reported the widespread practice of companies paying bribes to public officials in order to, for example, win public tenders, avoid regulation, speed up government processes or influence policy.

However, companies are almost as likely to pay bribes to other businesses, according to today’s report, which looks at business-to-business bribery for the first time. This suggests that corruption is not only a concern for the public sector, but for the business sector as well, carrying major reputational and financial risks for the companies involved.

“It is clear that bribery remains a routine business practice for too many companies and runs throughout their business dealings, not just those with public officials. And companies that fail to prevent bribery in their supply chains run the risk of being prosecuted for the actions of employees and business partners,” said Labelle.

The 2011 Bribe Payers Index also looks at the likelihood of firms in 19 specific sectors to engage in bribery and exert undue influence on governments:

• Public works and construction companies scored lowest in the survey. This is a sector where bypassed regulations and poor delivery can have disastrous effects on public safety.
• Oil and gas is also a sector seen as especially prone to bribery. The extractives industry has long been prone to corruption risk. Companies operating in oil-rich Nigeria have already been fined upwards of US $3.2 billion in 2010-2011 for bribery of public officials.

CDP: Launching a new offshore fund?

Anyone who ever arrived at a busy airport to catch a flight has been exposed to the frequently stressful experience of being caught up in a distribution hub –airports are distribution points where passengers are screened, directed and transported to their respective destinations. Time is of the essence and efficiency is absolutely required. All airports look vaguely familiar regardless of country or local language – but frequent travelers quickly differentiate the good from the bad.

Offshore financial centres are no different. Their frequent users are international asset and hedge fund managers whose mission is to efficiently deploy investment monies. These managers need their funds, whatever the currency, to travel from origin to investment destination safely and efficiently. Time lost in the distribution process translates directly into lost money.

Given a choice, investment fund and hedge fund managers have incentive to seek out the most efficient and secure offshore jurisdictions. They will choose to use only those jurisdictions that are efficient, secure and hospitable. Only the most efficient offshore financial centres are going to be selected to implement sophisticated international investment strategies.

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Launching a new offshore fund?