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SEN RAMSAMY É DITION 128 – VENDREDI 13 JANVIER “IL NOUS FAUT ÊTRE PLUS CRÉATIF DANS NOTRE OFFRE TOURISTIQUE” 2017 L’ HEBDOMADAIRE ÉLECTRONIQUE GRATUIT "Probably time to revise our dual taxation system" RICHARD ARLOVE, CEO OF ABAX HÔTELLERIE 11 ÉTABLISSEMENTS EN RÉNOVATION AU COÛT DE RS 5,95 MILLIARDS LILOWTEE RAJMUN, DIRECTRICE DE LA MEXA « LE SPEED-TO-MARKET SCHEME RENDRA L’EXPORTATION MOINS CHÈRE » LA TOUR VENDREDI 13 JANVIER 2017 | BIZWEEK | ÉDITION 128 4 "Probably time to revise our dual taxation system" RICHARD ARLOVE, CEO OF ABAX For years now, the global business sector has been considered as a separate system, that is, a sector which is not linked to the real economy. However, says Richard Arlove, Chief Executive Officer of ABAX, it is high time to make the sector part and parcel of the national economy. Questioned about the black list being prepared by the European Union Commission and which will be ready at the end of this year, the CEO says he does not apprehend such a list. But, he adds, it is probably time to review our dual taxation system. Right now, Mauritius has one taxation system in place for local companies, and one for Global Business Companies. According to him, the Government and the industry are working together on this issue NABAX is for the integration of the financial services sector within the local economy. Why is that? Today, the assets under administration of the 12 000 Global Business Category 1 (GBC 1) are 40 or 50 times our Gross Domestic Product (GDP). That is these companies have assets that are administered here. These assets have been through the banking system, through approvals in board meetings, they are subject to IFRS accounting principles and are all managed in Mauritius. Ask yourself the question: these assets are not in Mauritius, but these companies have trust in the Mauritian system. How can we leverage on the trust that they have to add more value to our country? How can they set up offices here? How can they come and live here? How can they employ people here, other than people in the financial services sector? It’s about adding value to the local economy. Once we understand the importance of having people in Mauritius who trust our system, and have their assets managed here, it means the sky is the limit. In order to really leverage on that, we do not only have to look at the domestic businesses as they are today, but we really need to think about how to further encourage people from overseas to come and live here. If you take a foreign entrepreneur who comes here with five people/employees, they might be earning five times more than the average Mauritian. How much more value can they add to the country? This is what we talk about when it comes to integration. As of now, the global business sector has been seen by many as an offshore sector which is not linked to the real economy, as a separate system. We can further enhance it to really form part and parcel of the national economy. At ABAX, it has been our advocacy for many years; that the laws and regulations surrounding the global business be integrated with other laws. The faci- lities offered to people coming to live and work here, as well as to their spouses, must be reviewed. If you have someone coming here, but his or her spouse cannot come to work here as well, this will discourage the person from coming. So we are losing out on very high profile people who can help develop the economy and create employment. We need to think about a strategy of integration and look at all components that will favour this integration. Many things can be done. This is why many people are advocating for better connectivity in terms of flights to Africa. We have pushed to consider issuing a Mauritian passport – not citizenship – on specific conditions to people who come to set up their businesses and offices here. The Mauritian passport may allow them to travel over Africa more easily than the passport of their home country. NAs you might be aware, the European Union Commission is preparing its black list which will be ready by the end of 2017. One of the risk factors for Mauritius is our low corporate tax. Do you apprehend this black list? No, I don’t. We – the financial services industry – have had meetings with the Government over the past few weeks and months, in relation to this matter. We, together with the Government, are aligned on the commitment to change things in Mauritius in order to dispel all the doubts and uncertainties that might exist. However, effectively, it’s not so much about low taxation. It’s rather about what the European Union terms as “harmful tax practices”, since we have a dual system of taxation, one for GBC and one for Mauritian companies. That’s why the industry and the Government feel that it is effectively a challenge. But how can we turn that challenge into an opportunity? We had very interesting discussions within the industry and with the Government. We look at our tax system and our regulatory system in order to make that challenge become a new model for doing business for global business. Let’s take the giant steps that we need so that the country can have an ecosystem that will enable Mauritius to become a completely recognized and respected financial sector. NDoes it mean we have to revise our dual taxation system? Most probably, yes. But as I said, there are many possibilities. Experts have been commissioned to work on this question by the Government and the industry. There are many possibilities to change the system and to make it a much better one going forward.