Download Probably time to revise our dual taxation system

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.