Is Mauritius ready for BEPS?

The implications of the Base Erosion Profit Shifting (BEPS) for Mauritius
Juristconsult Chambers and Indian law firm Nishith Desai Associates jointly held, on Thursday 7 April 2016 at the Labourdonnais Waterfront Hotel, a seminar entitled “Is Mauritius ready for BEPS?” The seminar was attended by senior management and officials from the banking and other financial services industry.

The Base Erosion Profit Shifting (BEPS) project is aimed at preventing aggressive tax planning, whereby loopholes in tax rules are exploited to effect an artificial transfer of profits in a low tax jurisdiction. This is the backdrop against which the Organisation for Economic Cooperation and Development (OECD) and the G20 have vowed to fight against the erosion of the tax base and the transfer of profits. The BEPS project is divided into 15 action points.

Marc Hein G.O.S.K, Chairman of Juristconsult Chambers, opened the debate by stating that Mauritius was a clean jurisdiction with no tax haven status and that the BEPS project could have unwanted effects on our financial centre.

According to the speakers of the Indian firm Nishith Desai Associates, Rajesh Simhan – Partner and Head of the International Tax Practice and Meyyappan N. – Senior Associate, the impact of the BEPS project on the double tax treaty between Mauritius and India and the Indian Government’s position regarding the implementation of BEPS cannot be fully assessed at this stage. However, the BEPS project is expected to have a significant impact on the global tax landscape.

As regards Mauritius, speakers at the seminar, Johanne Hague – Head of Tax and Arvin Halkoree – Barrister at Juristconsult Chambers, Yamini Rangasamy – Section Head of International Taxation at the Mauritius Revenue Authority and Rajesh Ramloll – Chairman of the International Fiscal Association (Mauritius branch), agreed on the fact that Action 6 of the BEPS project on the prevention of abuse of double taxation treaties was one of the actions that would impact directly on our jurisdiction.

Johanne Hague insisted that, “everything is not black and white. We must be able to balance the economic interests of a country on one hand and the need to put an end to tax evasion on the other “.

The necessity of amending domestic laws, negotiating bilateral treaties as well as the renegotiation of existing treaties have also been widely discussed. “The Global Business sector, which will be the most exposed sector, must quickly reinvent itself to incorporate even more substance and value to ensure that Mauritius is not categorised as a tax haven“, said Yamini Rangasamy.

The discussions also focused on Action 15 relating to the negotiation of a multilateral instrument to amend existing bilateral tax treaties. For Rajesh Ramloll, “it will be important for Mauritius to try to robustly negotiate this multilateral instrument since Mauritius has over forty treaties and will therefore be strongly impacted.