The Economic Development Board of Mauritius and the Financial Services Commission, in a joint communiqué, deem that the findings of the paper published last week by the International Monetary Fund (IMF) entitled The Cost and Benefits of Tax Treaties with Investment Hubs – Findings from Sub-Saharan Africa are purportedly misleading and biased.
The panel data set and time period (from 1985-2015) used for the analysis in the research paper do not take into account the changes recently brought by Mauritius in its financial services sector, and do not reflect the positive attributes that Mauritius bring to its fellow African countries by encouraging productive investments.
The report ignores the fact that Mauritius is recognised by international authoritative institutions, such as the Organisation for Economic Co-operation and Development, as a well-regulated jurisdiction when it comes to international fiscal matters, and has constantly and consistently implemented significant initiatives to enhance its legal and regulatory frameworks for exchange of information and transparency as per international norms and standards. Moreover, in their findings, the authors suggest that African countries are likely to face a substantial reduction in tax revenue when signing tax agreements with investment hubs like Mauritius.
As a founding member of the African Union, Southern African Development Community and Common Market for Eastern and Southern Africa, Mauritius has been and remains a strong economic partner amongst Sub-Saharan African countries, participating in the economic development process and advocating for the economic empowerment of Africa. Mauritius is the centre for business and investment into the continent, and is rightly set as the facilitator for attracting funding required for African ventures given its close ties as part of Africa. It is also a major contributor to Foreign Direct Investment in Sub-Saharan Africa. Institutional investors, sovereign wealth funds and other impactful investors have chosen Mauritius as their jurisdiction of choice for investing in Sub-Saharan Africa. The investment strategy of these investors is based on the environmental, social and human impact of these investments on African communities.
Tax Agreements are not the most significant criterion for these investors. In fact, substantial investments from Mauritius into Africa are in countries with which Mauritius does not have a tax agreement. Rather, the main interest for them to work with Mauritius is a multitude of compelling reasons.
The Mauritius International Financial Centre (IFC) offers a plethora of services, in a well-regulated and conducive eco-system, which enable impactful cross-border investments into the African continent. The Mauritius IFC also offers full protection of foreign investments through its legal framework and network of Investment Promotion and Protection Agreements. The economic track-record of Mauritius and its political stability are key features encouraging the international community to use the Mauritius IFC as investment platform for the region.
Source: Government of Mauritius