A major player

Monday, 01 July 2013
Shammeem Abdoolakhan reviews Mauritius’ legal and financial regulation framework.

Mauritius has, over the years, evolved from a mono-crop economy to a well-diversified economy. It is fully integrated into the world economy and comprises different sectors of equal importance, such as agro-industry, tourism, information and communication technology, and financial services.

Financial services and global business make up a rising share of gross domestic product, contributing notably to employment and tax. Mauritius is known as a route for investment into India, but is also on course to become the gateway for investment in Africa. The continent is rich in resources,1 with opportunities in mining, tourism, infrastructure, telecommunication and other projects essential to private, profit-oriented investment.

Legal framework

Mauritius has a hybrid legal system combining civil law originating from the French Napoleonic code with common law on the English model.

For example, trust law, governed by the Trust Act 2001, follows common-law principles, while the Foundation Act is a civil-law concept. Mauritius has a modern corporate law framework that offers investors an array of products. In the past two years, three laws have enhanced this further: the Limited Partnership Act, the Foundation Act and, most recently, the Private Pensions Act. A Limited Liability Partnership Bill seeks flexibility in investment structuring and will soon be presented in parliament. Mauritius is an international commercial and investment arbitration centre – the first in the region. The court of final appeal is the Judicial Committee of the Privy Council.

Trade connectivity

Mauritius is a major player in African economic cooperation and integration. It is a member of the Southern African Development Community and the Common Market for Eastern and Southern Africa. This gives Mauritius the potential to open trade into Africa, providing preferential access (tariff- and quota-free) to international investors.

Mauritius has also developed tax-exempt free port facilities, which are among the best in the region for warehousing, processing and distribution. Preferential access to markets extends further, thanks to agreements with the EU2 and the US.3

Positive OECD peer review

Mauritius has made efforts to reaffirm its reputation for transparency and compliance with international norms and standards. It has volunteered for OECD Phases 1 and 2 reviews and was acknowledged as having taken significant steps to enhance exchange of information and its legal and regulatory framework. Mauritius has always been on the OECD’s white list of jurisdictions.

Regulatory framework

Mauritius has preserved its image as a financial centre of good standing and repute, not associated with financial crime or other abusive practices. Its Financial Intelligence Unit is part of the Egmont Group of Financial Intelligence Units. As for regulation, the Financial Services Commission covers non-banking financial institutions while the Bank of Mauritius supervises the banking operation. The Bank of Mauritius has adopted a risk-based supervisory framework to foster stronger risk management and compliance. Companies can be listed on the Stock Exchange of Mauritius, which is a leading African exchange and a member of the World Federation of Exchanges.

Extensive treaty network

Mauritius combines the tax-efficiency of a traditional international financial centre with a wide network of double-taxation and investment promotion and protection agreements. Mauritius has no exchange control and allows free repatriation of capital. There are no withholding taxes on dividends, interest and royalties, and capital gains on disposal of securities and other movable property are exempt from taxation. 

  • 1. Africa Progress Report 2013
  • 2. Economic Partnership Agreement for the Eastern and Southern African States
  • 3. Africa Growth and Opportunity Act
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Shammeem Abdoolakhan

Shammeem Abdoolakhan TEP is Senior Manager in Corporate Services at Cim Global business.

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