The island’s Finance Minister wishes to boost growth in Mauritius and qualify it as a high-income state by the year 2020, following pressure to shift from its current “tax haven” economy status.
Amid the debate by world economies on how to better control lost tax revenue being held in tax havens by multinational companies, Mauritius is already planning for the “next day”. It comes at a time that India is calling for changes in its tax treaty (DTT) with Mauritius, wanting the island’s new government to turn the page on its current business model.
Despite the newly formed government, which came into office in December last year, debates whether Mauritius was ever indeed a tax haven, everyone agrees that there should be an economy focus shifting. It considers that making firms invest locally and a preparation for any possible loss of business from India should be amoungst its prime priorities.
“Singapore is to Southeast Asia, what Dubai is to the Middle East, and what Mauritius will be vis-à-vis to Africa. My message for the offshore sector is this: they have to move from a tax haven to a typical transparent financial sector. This is what is happening now.”
– Seetanah Lutchmeenaraidoo, Mauritius’ Finance Minister.
A Global Business Company 1 (GBC1), the title for “offshore” firms, is currently paying zero capital gains tax in Mauritius, compared to as much as 40% in India. Changes are currently being discussed to the tax treaty would limit the appeal of Mauritius. In the case that a company still chose to be based there, then it would be required to spend at least $42,700 a year on the island before enjoying treaty benefits.
Mauritius is currently holding talks with insurance firms such as Axa and Prudential to use the island as their regional headquarters. The government also seeks to invest alongside Ghana on technology, poultry, sugar and other projects, with Mauritius firms and capital involved.