Dear Readers, Jimmy Wong. Managing Director

Transcription

1 Dear Readers, As you can read in our newsletter, Mauritius is buzzing as a regional hub for African investments. The quality and level of the participants in the two international forums that took place recently in Mauritius is testimony to the ever increasing role that our country is taking pride in playing to facilitate investments in the African continent. The rapid extension of our tax treaty network with African countries is certainly playing an important part in positioning Mauritius as the recognised regional hub. This is reinforced by the consistent performance of Mauritius in the international rankings and the constant efforts by the public and private sector alike to continuously improve on our business and regulatory environment. We are confident that this momentum will gather place and that Mauritius will continue to taking an active part in promoting regional cooperation. Jimmy Wong Managing Director

2 TREATY UPDATE Double Taxation Agreement Mauritius - Republic of Congo The Double Taxation Avoidance Agreement (DTAA) between Mauritius and Republic of Congo (Brazzeville) has been ratified by the President of the Republic of Congo, as published in the Journal Officiel de la République du Congo of 7 August 2014 under Loi n du 1er août The DTAA will come into force upon completion of ratification by the Government of Mauritius. The key features of the Mauritius-Republic of Congo treaty are summarized below: Income Domestic Rate in Republic of Congo (%) Mauritius-Congo Treaty Rates (%) Dividends 20 0/5 (a) Interests 20 5 Royalties 20 0 Capital gains 33 Taxing right to resident state (a) 0% rate applies if the effective beneficiary of the dividends owns at least 25% of the distributing company. 5% applies in all other cases. Source: Journal Officiel de la République du Congo 7August 2014 Double Taxation Agreement Mauritius - Rwanda REPUBLIC OF CONGO OVERVIEW QUICK FACTS Region: Sub-Saharan Africa (developing only) Income Level: Lower middle income Population: million (2013) GDP: USD billion (2013) GDP Growth: 3.4% (2013) Inflation: 6.0% (2013) The country boasts numerous assets: substantial oil reserves, close to 22 million hectares of natural forests, 10 million hectares of arable land, a highly developed hydrographic network, a climate conducive to agriculture, and mineral resources. Added to all this are its strategic geographical position in Central Africa and a 170- kilometer long coastal front on the Atlantic Ocean, with a deep-water port (Pointe-Noire) that could serve as a gateway for the entire sub-region. RWANDA OVERVIEW A new DTAA between the Republic of Mauritius and the Republic of Rwanda was signed on 20 April Following the completion of necessary internal procedures by both parties, the new DTAA has entered into force on 4 th August In accordance with Article 28(2) of the DTAA, the provisions of the Agreement shall be deemed to apply as follows: (a) in Rwanda, in respect of any income year beginning on or after 1 January 2013; & (b) in Mauritius, in respect of any period beginning on or after 1 July Some of the key features pertaining to the DTA Mauritius-Rwanda are set out below: Income Domestic Rate in Rwanda (%) Mauritius-Rwanda Treaty Rates (%) Dividends Interests Royalties Management or professional fees Capital gains 30 Taxing right to resident state Source: Double Taxation Avoidance Agreement Mauritius-Rwanda QUICK FACTS Region: Sub-Saharan Africa (developing only) Income Level: Low income Population: million (2013) GDP: USD billion (2013) GDP Growth: 4.6% (2013) Inflation: 4.2% (2013) Rwanda s long-term development goals are embedded in its Vision 2020 which seeks to transform Rwanda from a low-income agriculture-based economy to a knowledgebased, service-oriented economy by The Economic Development and Poverty Reduction Strategy (EDPRS 2) s highest priority is growth acceleration and poverty reduction through its four thematic areas: economic transformation, rural development, productivity and youth employment, as well as accountable governance. The EDPRS 2 aims to achieve the following goals by 2018: (i) increasing GDP per capita to $1,000, (ii) reducing the poverty rate to below 30% and (iii) the reducing extreme poverty rate to below 9%. An underlying macroeconomic assumption is to accelerate annual GDP growth to 10% over the period Source: The World Bank 2014

3 TREATY & AGREEMENT UPDATE MAURITIUS EXPANDS DTA AND IPPA NETWORK In its quest to boost its position as a premier financial hub for Africa, Mauritius is expanding its already wide network of tax treaties and investment promotion agreements, as illustrated below. DOUBLE TAXATION AVOIDANCE AGREEMENTS The latest DTAA updates are summarised in the table below: Country Cape Verde Malta Morocco Guernsey Rwanda (new) Congo Kenya Status Awaiting signature Awaiting signature Awaiting signature Effective for the income year beginning on or after 1 st January 2015 Effective for the income year beginning on or after 1 st January 2013 Awaiting ratification by Government of Mauritius Effective for the income year beginning on or after 1 st January 2015 INVESTMENT PROTECTION AND PROMOTION AGREEMENTS Negotiations on new IPPAs have also been concluded recently with Cape Verde and Burkina Faso. The procedures for the signing of the two agreements are underway. The IPPA between Mauritius and Egypt was signed on 25 June The Agreement will enter into force after the completion of necessary internal legal procedures by both parties and reciprocal notification. The IPPA between Mauritius and Kuwait has entered into force on 24 July US FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA) Mauritius has signed an Inter-Governmental Agreement (IGA) and a Tax Information Exchange Agreement (TIEA) with the United States of America on 27 December 2013 to be FATCA compliant. The IGA and the TIEA have entered into force on 29 August Source: Ministry of Finance and Economic Development 5 September 2014 L express 2014 «Koweït, Cap -Vert, Burkina, Malte: des accords sur la non double imposition fiscale en vue» AfricaMoney 2014 Mauritius expands tax treaty network to boost status as financial hub Double Taxation Avoidance Agreement Mauritius-Guernsey Kenyan Gazette Supplement No rd May 2014

4 MAURITIUS-TURKEY JOINT BUSINESS COUNCIL The official launch of the Mauritius-Turkey Joint Business Council took place on the 29 th August 2014 and was preceded by the signing of a Memorandum of Understanding (MoU) between the MCCI, represented by Mr. Raju Jaddoo, Secretary- General, and the Foreign Economic Board of Turkey (DEIK), represented by Mr. Omer Hakan Baki, Chairman of the Turkish-Mauritian Business Council. The event was also marked by the signature of another MoU agreement with the Union of Chambers and Commodity Exchanges of Turkey (TOBB). The objective of the Mauritius-Turkey Joint Business Council is to promote amplified collaboration and exchanges between the two respective organizations with a view to consolidating further relations between the business communities of both countries. The signing ceremony took place at Kaya Thermal Convention Centre in Izmir where the largest Turkish International trade fair is being held from the 29 August to 5 September 2014 and in the context of which Mauritius has been appointed as Partner Country by the government of Turkey. Source: The Mauritius Chamber of Commerce and Industry MCCI SIGNS MoU AGREEMENT WITH AUSTRIAN FEDERAL ECONOMIC CHAMBER The ''Forum Emerging Markets 2014'' was held in Vienna on the 4 th September 2014, with the objective of consolidating business relations between Mauritius and Austria. The event was organised by the Federal Ministry of Economy and the Austrian Federal Economic Chamber. On that occasion, a MoU was signed between the MCCI and the Austrian Federal Economic Chamber. The event brought together Austrian companies and practitioners from development banks, financing organisations and public institutions. Discussions were centered on business opportunities and financing options for projects in emerging markets and risk management. The Forum also served as a platform to promote Mauritius as the rising headquarter hub in the South-East Africa region. Presentations were made by the Secretary-General of the MCCI, Mr. Raju Jaddoo and by the Director of the Board of Investment, Mr. Ken Poonoosamy, on the advantages of investing and doing business in Mauritius and on building partnerships. Source: The Mauritius Chamber of Commerce and Industry CHINA AND MAURITIUS INVESTMENT FORUM The China and Mauritius Investment Forum was held on the 24 th September 2014 at Le Meridien Hotel, organised by the Board of Investment. The aim of this Forum is to promote Mauritius as the ideal financial platform for investments into Africa and to strengthen business relations between Mauritius and China. The Forum featured a workshop by DTOS, one the event sponsors, on the fiscal environment of Mauritius which was presented by our Head of Asia and India Desk, Mr. Kevin Allagapen. The presented case studies illustrated the benefits of using Mauritius as an efficient investment platform. QUICK FACTS: The investment landscape in Africa is rapidly changing. According to Premier Li Keqiang, trade volume between China and Africa will double by 2020 and the Chinese Outward Foreign Direct Investment (OFDI) to the continent will quadruple to $100 billion within that time. China has become Africa's biggest economic partner, and Li predicted trade volume would reach US$400 billion, up from US$200 billion last year, by Li also declared that the Chinese government proposes to establish joint venture airlines between Chinese companies and Africa and to provide civilian aircrafts to develop the regional aviation industry. Moreover, he mentioned the setting up of a high-speed railway research and development centre in the continent. Source: South China Morning Post

5 MAURITIUS UPDATE Global Competitiveness Report ranks Mauritius as first in Sub-Saharan Africa Mauritius came first in Sub-Saharan Africa again on the Global Competitiveness Report published by the World Economic Forum, proving once more the competitive edge of the island nation in the regional economy. The island has continued its steady upward climb this year, moving up by six positions to 39th place and thus consolidating its lead in the region. The Global Competitiveness Report is calculated through the Global Competitiveness index and assesses the competitiveness landscape of economies worldwide. This year s report provides insights into the drivers of the productivity and prosperity of 144 countries based on 12 pillars of competitiveness. The report attributed the country`s progress to the gradual improvements of seven pillars out of the 12 pillars used in the ranking as shown in the table below: PILLAR RANK REMARKS Strong Investor Protection 12 th Effective auditing Accounting standards Private institutions 14 th Highly accountable Flexibility 18 th Business sophistication Goods Market Market Efficiency: Financial Markets Efficient Government Public Institutions 25 th Enabling conditions for both domestic and foreign competition 26 th Efficient Clear property rights 26 th 36 th Strong judicial Independence Relatively strong Transparent Transport Infrastructure 42 nd Ports, air transport, and roads Electricity and Telephone Infrastructure 44 th Well developed Labor Market 52 nd Efficiency Higher Education And Training 54 th Talent 101 st Source: AfricaMoney 2014

6 MAURITIUS UPDATE Mauritius becomes third African country to introduce pre-local operating unit Mauritius non-banking financial services regulator, the Financial Services Commission (FSC), has declared the CDS (Central Depository & Settlement) of the Stock Exchange of Mauritius to be an authorized Pre-Local Operating Unit (LOU) for issuing Global Legal Entity Identifiers (LEI) to entities domiciled in Mauritius. The fact that the CDS has been allocated the Pre-LOU authorization makes Mauritius only the third country in the African continent, after South Africa and Nigeria, to introduce this codification. The LEI system is an alphanumeric code and associated set of six reference data items to uniquely identify a legally distinct entity that engages in financial market activities. A global system that identifies legal entities across markets and jurisdictions is needed to ensure uniqueness. The CDS has a strong track record since inception with no failed trade; no systems downtime; and no legal and regulatory issues. On September 8, 2014, the CDS was attributed the prefix 1325 by the Regulatory Oversight Committee of the Global Legal Entity Identifier (LEI ROC) after FSC Mauritius confirmed that the CDS meets all required conditions in terms of infrastructure, tools and processes. Overall, the LEI is an important tool to assess systemic risk and maintain financial stability; conduct market surveillance and enforcement; supervise market participants; conduct resolution activities; prepare high quality financial data; and to undertake other official functions. In the African region, it is going to demonstrate that Mauritius is moving fast on ease of doing business. It is not an easy task and with all the work behind us, it will show a certain degree of success. It is a global initiative and needs to conform to global standards, said FSC CEO Clairette Ah-Hen. Source: AfricaMoney 2014

7 Private Equity Mauritius 2014 The 4th annual edition of the Private Equity Mauritius Conference, organised by the Board of Investment (BOI), was held over the 25 th and 26 th September 2014, at the West Turtle Bay Hotel in Balaclava. The main purpose of the conference is to provide useful information to potential investors on Mauritius as a gateway of choice for private equities dedicated to Africa. The event, themed Capitalising on Africa s Growth, regrouped more than 250 professionals in the private equity sphere from over 20 countries, including distinguished high-level speakers from the Commonwealth Development Corporation, African Development Bank and European Investment Bank. The opening address was delivered by the Mauritius International Trade Minister Dr. Arvin Boolell, who expressed that the emerging continent of Africa is the current frontier of growth and provides growing investment opportunities to global Private Equity firms. The minister stressed that Africa is expanding and opening up tremendous opportunities for the rest of the world, noting the rising trend of big private equity firms eying the African market to benefit from the great potential offered by the continent. He observed that the contribution of PE firms goes beyond merely providing capital, with their involvement leading to learning best practices, wider networking opportunities and improvements in environmental, social and corporate governance policies. Moreover, their investment in the continent culminates in poverty alleviation through proliferation of employment opportunities. Dr. Arvin Boolell next spoke of how Mauritius, as a regional financial hub, was well positioned to be the platform for such investments in Africa and across the region. In this context, he highlighted that the island boasts world-class financial center, state-of-the art infrastructure, business-friendly jurisdiction, as well as stable political and financial environment and finally, a strategic geographical location in the Indian Ocean to better serve as the gateway to Africa. Mauritius remains a service centre of choice for doing business with Africa, he noted, adding that the island economy is now going beyond that status and putting in concerted efforts achieve a deeper and more meaningful regional integration in Africa. According to him, for intra-africa investment to prosper, business representatives and investors must have facility to move around easily, and Mauritius has done a lot in that context by abolishing visa requirements for as many as 48 African countries prior to travelling to the island. The BOI Managing Director Ken Poonoosamy noted that, since 2012, companies from Mauritius have invested in high value projects worth USD3.5 billion in Africa, showcasing how the island is uniquely positioned to serve the continent s growth needs by providing necessary investments for infrastructure. He concluded on the note that the prosperity and growth of Mauritius is intrinsically linked with the economic and technological advancement of the continent, as the continent becomes the global magnet for massive investments. In a nutshell, the event provides participating organizations with the opportunity to catch up with the latest regional Private Equity investment trends and developments; explore, discuss and invest in key projects in African countries; discuss latest regulatory trends with respect to Private Equity; learn the benefits of Mauritius as the regional financial and investment platform; and discuss the potential of the blue economy for diversification of Private Equity investments. In addition, this year s conference has a special focus on the strategy of Development Finance Institutions (DFIs) and Sovereign Wealth Funds (SWFs) for Africa, the increasing role of private equity funds in socio-economic development and their impact on investment across the continent. The conference boasts an impressive line-up, featuring Martyn Davies, CEO of Frontier Advisory as keynote speaker; Terry Smith, the founder and CEO of Fundsmith; Nainesh Jaisingh, Managing Director and Global Co-Head of Standard Chartered Private Equity; Line Picard, Chief Private Equity Officer of the African Development Bank (AfDB); Peter Ballinger, Managing Director of US agency Overseas Private Investment Corporation (OPIC); Ashvin Roy, Head of Private Equity at State General Reserve Fund, Government of the Sultanate of Oman, and Patience Matshe, Director of Funds Management and Mauritus Office, PTA Bank, among others. Source: AfricaMoney 2014

8 Private Equity Investment in Africa East Africa is experiencing a wave of private equity (PE) flows as investor confidence in the region increases. The number of private equity deals carried out in 2013 in the region doubled to 26 compared to the previous year, according to the recent 2014 East Africa Private Equity Confidence Survey by professional services firm Deloitte. Private equity investors have long looked to four large emerging markets for big returns: Brazil, Russia, India, and China. However, with each BRIC economy in some sort of trouble, private equity firms are increasingly putting their investment dollars to work in other less-developed markets especially Southeast Asia and Sub-Saharan Africa in hopes of better returns (CNBC 2014). Based on the survey by Deloitte, 84 deals were completed in SSA in 2013, of those 46 reported total values of US$3.69bn. Private Equity funds invested more than three times as much in sub-saharan Africa in 2013 as they did in 2012, hereby indicating increased appetite for opportunities in the region which, according to the World Bank, is also one of the fastest growing in the world. Data from the survey reflects a slump in deal-making in 2012, likely linked to lack of confidence in global markets and fallout from the Eurozone crisis that depressed growth in many African countries that year. Moreover, an increasing number of funds are being closed, suggesting an improvement in the fundraising environment. Confidence for PE in Africa is certainly increasing. Track records are deepening, growth is strong, risks are manageable and Limited Partners (LPs) continue to rate the region highly amongst their emerging market options.

9 Private Equity Investment in Africa The extractive industries had the highest value of reported deals in SSA in The largest deal in this sector was US$1.53bn, involving Helios Investment Partners alongside BTG Pactual in a 50/50 joint venture with Petrobras International Braspetro B.V., a subsidiary of Petrobras, to explore and produce oil and gas in Africa, through a specialized investment vehicle. The other major deal was Warbug Pincus US$600m early-stage investment into Delonex Energy, a start-up Africa-focused resources exploration company in Central and East Africa. Nevertheless, when considering the number of deals, the manufacturing and financial sectors recorded the highest number (13 each), followed by agribusiness (12), TMT (7) and infrastructure (6). The majority of these deals values were not disclosed, though they involved Small and Medium Enterprises (SMEs). Deals in Eastern Africa were concentrated in agribusiness, healthcare and financial services, with a large deal of US$60m from Norfund s and AIIM investment in a wind power project in Kenya. Going forward, deals are expected to concentrate on SMEs in the consumer driven sectors, where an expanding middle class is seen as a key driver of future revenues. A few large deals might also be seen in the extractive or related industries, driven by the ongoing exploration activities of oil and gas in Eastern Africa. (Source: Deloitte 2014 East Africa Private Equity Confidence Survey, CNBC, EMPEA, World Bank)

10 Mauritius Home to Private Equity Funds targeting Africa Africa and Mauritius have enjoyed long and close cultural, business and bilateral ties for centuries. Leveraging on these strong ties as well as its strategic geographical position midway between Asia and Africa, Mauritius has successfully positioned itself as an attractive, secure and competitive location for cross-border investments and is regarded as a stepping stone for investments into and trading with Africa. Mauritius is recognised as an ideal financial centre of choice by a number of international investment funds, private equities and investment holdings largely due to its convenient time zone allowing trading with all major markets in a single business day and its developed business, banking and technological infrastructure. The strong and fast expanding presence of international law firms, corporate services providers, fund managers, global investment and wholesale banks as well as state of the art exchanges is testimony to this fact. Mauritius offers a risk mitigating and fiscally efficient financial centre for the structuring, administration and effective management of Africa related investments. While DTAAs allow for efficient tax planning by preventing the same income from being liable to double taxation in both contracting states; IPPAs help in mitigating risks by guaranteeing free repatriation of investment capital and returns to investors from the contracting states as well as shielding investors against expropriation. The fiscal certainty, investment protection as well as political and economic stability that the jurisdiction provides contribute significantly in further attracting global players to use Mauritius as their African platform. The financial services and IT sectors are geared to support private equity activity. Major international banks and accounting firms are present with various fund administrators providing fund licensing and back office support services. Technical, legal and logistical support is readily available with strong local skills in accounting, legal and fiscal matters. Private Equity Funds and other financial service firms focused on Africa are drawn by these advantages. Well-known institutions which have established funds in the jurisdiction include Standard Life, Goldman Sachs, Carlyle and BlackRock. Other funds groups include Aureos Capital, Integra Partners, Adlevo Capital, the Grofin Group and I&P Capital. The choice of jurisdiction for a private equity fund operating in Africa is influenced by many factors relating to the overall operating environment. Mauritius has established itself as one of the most successful financial centers because it has created a conducive business environment that is internationally competitive. (Source: Global Finance Mauritius, BOI, CBC-Commonwealth Trade & Investment Report 2013)

11 Mauritius Home to Private Equity Funds targeting Africa Despite various worldwide fiscal crises, Mauritius has maintained an excellent economic record. The island benefits from an ideal ranking in Africa from several indexes, showing that it provides a solid platform for outward investments. INDEX (2013) ORGANISATION RANK IN AFRICA Ease of doing business World Bank 1 st Top Regional Reformer World Bank 1 st Economic Freedom Heritage Foundation 1 st Easiest Country for Trade World Economic Forum 1 st Best Countries for Business Forbes Survey 1 st Most Improved Investment Climate Africa Business Awards 1 st Governance Quality MO Ibrahim Foundation 1 st Harvard University Best Governed Country (Kennedy School of Governance) JOHNSON Cornell University, Global Innovation INSEAD, WIPO Environmental Performance Yale and Columbia Universities 1 st Quality of Air World Health Organization 1 st Country Brand Index Future Brand 1 st World Economic Forum Networked Readiness Index (Global Information Technology Report 2014) Africa Competitiveness World Economic Forum 2 nd African Countries of the Future fdi Intelligence 3 rd 1 st 1 st 1 st

12 Mauritius Home to Private Equity Funds targeting Africa Member of IOR-ARC Member of COMESA Member of AGOA Madagascar Uganda Zimbabwe Comoros Cape Verde Swaziland Botswana Republic of Congo Mozambique Seychelles Sierra Leone Tanzania Kenya Namibia Gabon Rwanda Member of SADC Signed MoUs with its African neighbours Why Mauritius? White listed jurisdiction recognised by OECD 19 IPPAs with African Nations Madagascar Mozambique South Africa Benin Zimbabwe Tanzania Ghana Guinea Republic Mauritania Rwanda Senegal Tchad Nigeria Burundi Cameroon Comoros Swaziland Kenya Republic of Congo 14 DTAAs* with African states Botswana Lesotho Madagascar Mozambique Namibia Rwanda Senegal Seychelles Swaziland South Africa Tunisia Uganda Zimbabwe Zambia