Financial Sector Assessment Of Mauritius Published

by Lorys Charalambous, Tax-News.com, Cyprus

11 September 2003

A Financial Sector Assessment has been drawn up following the IMF (International Monetary Fund) and World Bank's visit to Mauritius in October and December 2002, which identifies the strengths, vulnerabilities and development needs of the jurisdiction's financial sector, and aids the local authorities in implementing the report's recommendations.

Mauritian representatives including the Minister of Economic Development, Financial Services and Corporate Affairs and the Governor of the Bank of Mauritius were in broad agreement with the findings of the Financial Sector Assessment Program, and have taken steps to implement a number of the report's key recommendations.

The report notes that:

"Global businesses are attracted to Mauritius by a very low tax environment supported by 26 double tax avoidance treaties; modern business-friendly legislation for global business; policies favoring open trade, capital flows and exchange convertibility; good telecommunications; relatively low wages; a multilingual workforce; and location. As of June, 2002, the offshore sector included 14 banks, 11 captive and 4 non-captive insurers, 221 global funds and approximately 20,000 Global Business License (GBL) companies engaged in non-financial services or personal/family trusts."

However, the FSAP highlighted potential problems for the island's business sector resulting from possible conflicts with the governments of regional powers such as South Africa and India in the sphere of internatioanl taxation.

"Changes in tax and regulatory regimes in other jurisdictions could materially affect the growth of the global business sector. Mauritius is guarding against these risks by seeking to enter into treaties that follow good practices in avoiding the encouragement of “tax shopping”; defending legal challenges effectively; and negotiating treaties and successfully attracting business with other countries."

The report also noted that good progress has been made in recent years on coporate governance and anti-money laundering legislation, observing that:

"In line with international trends, the authorities are also taking steps to strengthen corporate governance. The Companies Act 2001 and the listing rules of the stock exchange have enhanced shareholder protections, and the BOM has issued binding Guidelines on Corporate Governance for the banking sector which are in line with international best practice.

The legal and institutional framework on anti-money laundering and combating the financing of terrorism (AML/CFT) in Mauritius is broadly in line with FATF 40 + 8 Recommendations. The Mauritian authorities have demonstrated strong political will and commitment to meeting international standards, and have made significant progress in establishing a comprehensive AML/CFT regime in recent years. The Mauritian government passed the Economic Crime and Anti-Money Laundering Act (ECAML) in June 2000.

Further efforts by the Mauritian government to improve the country’s legal and institutional framework have resulted in the enactment of major legislation, including the Dangerous Drug Act 2000, the Financial Services Development Act 2001, the Prevention of Corruption Act 2002 , the Prevention of Terrorism Act 2002, and the Financial Intelligence and the Anti-Money Laundering Act 2002, which replaced the ECAML."

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