Mauritius FSC Head Speaks On Finance Centre

by Lorys Charalambous, Tax-News.com, Cyprus

02 February 2004

Speaking to the Indian media recently, chief executive of Mauritius' Financial Services Commission (FSC), Iqbal Rajahbalee underlined the jurisdiction's commitment to ensuring that it meets international standards with regard to business practices, taxation, and anti-money laundering compliance.

In an interview last week with finance journalist, Lubna Kably, Mr Rajahbalee stressed that the Mauritian authorities have always gone to great lengths to ensure that the terms of the Indo-Mauritius tax treaty are not abused, a positive verdict recently reached by the Supreme Court of India.

"Let us be unambiguous about it, Mauritian authorities have never incited any misuse of the tax treaty and have always gone beyond their call to ensure that the letter and the spirit of the treaty are observed," he announced, continuing:

"The JPC Report itself contains evidence of the forthright steps taken by the Mauritius authorities, be it the Commissioner of Income Tax or the regulatory authorities, to foil attempts to abuse the treaty. Licences issued to companies carry a uniform licensing condition explicitly warning against any round-tripping by Indian promoters who seek to invest back into India with the purpose of taking undue treaty advantages."

Meanwhile, speaking with regard to the granting of licences for Global Business Companies (GBCs), he explained that the jurisdiction aims to protect itself from the establishment of GBCs for suspicious purposes by being highly alert to the degrees of risk posed by different types of business proposal.

"Our intrusiveness and the intensity with which we probe application documents must depend on the quality of the documentation submitted and on the extent of the perceived risks. A number of applicants who did not meet our new criteria have been led to withdraw their applications while those who persisted have found their applications rejected. We are presently defending an action before the Supreme Court of Mauritius on our decision to reject an application. We hold the strong view that licensing is one of the most effective regulatory tools," he announced.

Speaking, in conclusion, with regard to the favourable view of Mauritius taken by the Organisation for Economic Cooperation and Development (OECD) during its campaign to "blacklist" offshore jurisdictions as harmful tax havens, Mr Rajahbalee suggested that:

"There was no need to distinguish ourselves from tax havens because Mauritius is simply not one. If a low rate of tax or involvement in international investment business were the only criteria for being a tax haven, then I would imagine that the United Kingdom and the State of Delaware in the United States would be top of the chart followed closely by Ireland, Singapore, Hong Kong and Luxembourg. New Zealand would also have to be squeezed in because of its zero-tax non-resident trusts."

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