With the increased interest of the financial industry in Mauritius as a trading platform for African and Asian emerging markets, Mauritius strides forward through the diversification of its product-offering to an ever-growing international client base. In this respect, following the enactment of the Limited Partnership Act, which came in force in December 2011 and the Foundations Act 2012 which allows the setting-up of Private Foundations, the jurisdiction remained faithful to its commitment to the international financial community by pressing on with the signature of two new Double Taxation Avoidance (DTA) Treaties, namely with Egypt and Monaco. It has also moved forward by consolidating its position as a user-friendly and attractive international arbitration jurisdiction by passing a number of amendments to the International Arbitration Act. A third noteworthy development is the enacting of the Private Pension Schemes Act 2012, which improves the regulatory framework for the operation of private pension schemes.
Mauritius combines the advantages of a traditional offshore financial centre (no capital gains tax, no withholding tax, no capital duty on issued capital, exchange liberalisation and free repatriation of profits and capital etc.) with the ability for treaty based tax planning through its network of double taxation avoidance. Where a DTA applies, this results in interesting and attractive tax planning opportunities, which include:
The government of Mauritius has been actively seeking to expand its treaty network with other jurisdictions, which see the potential for increased Foreign Direct Investment (FDI) through Mauritius as a gateway. To date, Mauritius has concluded 37 tax treaties, 14 of which are with African states, while another 20 are in the pipeline. Further, following completion of renegotiation between the government of South Africa and Mauritius, a new DTA was signed which is expected to come into effect in 2014. This adds up to the list of treaties awaiting ratification, which comprises of Congo, Egypt, Kenya, Monaco, Nigeria and Russia.
Amendments to the International Arbitration Act
Mauritius has made further progress in establishing itself as a centre for international commercial conciliation and arbitration and in particular as the centre of reference for the arbitration of disputes relating to Africa by the recent amendments to the International Arbitration Act 2008 (the Act).
One of the most salient features in the amendments relates to the enforcement and recognition of foreign arbitral awards in Mauritius. The procedure for enforcement of foreign arbitral awards is governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 2001, which implements the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) within domestic law. The New York Convention was ratified by Mauritius subject to a reservation that it would only enforce foreign arbitral awards from countries that have themselves ratified the Convention, thereby limiting the number of countries whose arbitral awards could have been enforced in Mauritius. This amendment does away with this requirement.
Further, both English and French are considered official arbitration languages to avoid unnecessary translation expenses and ensure that awards rendered in both Anglophone and Francophone jurisdictions are enforceable without unnecessary expense and delay in Mauritius.
Other amendments clarify the legislation following confusion in the aftermath of the Trikona (2011) decision by providing that Mauritius global business companies may include arbitration clauses in documents and agreements, other than their constitution, which provide for an arbitration seat in any other jurisdiction.
Private Pension Schemes Act 2012
The Private Pension Schemes Act 2012 (PPSA) with effect from November 1 2012 provides a comprehensive and simple regulatory framework for the operation of private pensions in Mauritius.
Prior to the enactment of the PPSA, the private pensions industry was fragmented among several laws, namely the Employees Superannuation Fund Act, the Income Tax Act and the Financial Services Act and monitored by three different authorities namely the Registrar of Associations, the Mauritius Revenue Authority and the Financial Services Commission. Private pension schemes, with the enactment of the PPSA are now governed by a single legislation and a single regulatory body that is the Financial Services Commission, with the task to license, approve and control the private pension industry in Mauritius. The new framework focuses on good governance, transparency and accountability, risk management, and early warning signals and remedial interventions.
The PPSA covers all private pension schemes in or pertaining to Mauritius with the exception of schemes set up under existing legislations such as the National Pensions Act and the National Savings Fund Act. The new legislation also covers external and foreign pension schemes. External pension schemes are private pension schemes holding a category 1 global business license and aiming individuals outside Mauritius, while being administered in Mauritius. Foreign pension schemes are schemes regulated in a foreign jurisdiction but authorised to operate in Mauritius for the benefit of Mauritian employees.
The salient features of a pension scheme under the new legislation are:
(a) It must be set up as a trust or a foundation;
(b) It must be licensed or authorised by the Financial Services Commission;
(c) Its assets can be managed by a wide range of financial business providers licensed by the Financial Services Commission and must be held by a custodian licensed by the Financial Services Commission;
(d) It is highly regulated with stringent disclosure requirements to the Financial Services Commission and the beneficiaries;
(e) It must conduct its activities so as to remain in a financially sound position at all times; and
(f) It cannot be wound up without the approval of the Financial Services Commission.
This article is intended to provide general information only. It is not intended to offer, nor should it be interpreted as offering, legal advice. You must not act upon the matters referred to in it without taking specific advice.