Mauritius is not the first country most people think of as a tax haven, but this African island has a rich history of acting like one. Mauritius sits in the Indian Ocean off the southeastern African coast and gained its independence in 1968. It has a robust economy and stable democracy, as well as a reputation for being a tax haven.
Seeking Out Investments
Experts say that Mauritius’s first steps toward becoming a tax haven occurred in 1989. This was when the country wanted to diversify its economy to become less dependent on agriculture. It aimed to market itself as a gateway to Africa and attract multinationals and investors who wanted to invest in Africa.
Enacting Laws to Help Investors
The Mauritius Offshore Business Activity Act was enacted in 1992. This act made it possible for the incorporation of companies by foreign entities without requiring much public disclosure. In addition, the act requires no or minimal taxation and has excellent asset protection and privacy.
A further step toward the country’s tax haven status was when Mauritius signed a range of double tax avoidance agreements, including 18 African states and 46 from around the world. This type of agreement encourages investors by letting them easily operate in several countries without worrying about being taxed in every location. There was also criticism that it left the door open to abuse, as multinationals could shield assets.
Over the years, the steps Mauritius took to attract investors have also led to criticism from those who worry about its tax haven status. There is criticism of the increase in wealth inequality that its policies encourage. In 2015, the EU included Mauritius on its list of the top 30 tax havens to blacklist. In 2016, it was one of the worst tax havens, according to Oxfam. Companies like Deloitte and Appleby have also faced criticism for using the lenient tax measures in Mauritius and encouraging others to do the same.
Many investors who want to put money into Africa still choose Mauritius due to its established nature. It has investment regimes that fit international standards to a reasonable extent. Mauritius told the International Consortium of Investigative Journalism that its tax records combine UN and global tax treaties. The country indicated that it has renegotiated 60 percent of those deals since 2009. It also is working on renegotiations with six countries.
Even with recent changes, there are still critics of Mauritius’s loose taxation and privacy policies. However, investors appreciate these policies.
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