Financial Sector: Banks Pay the Highest Price, Offshore is Africanized

It is the banking sector that will cough up. From January, the 1 st  the government decided to change the formula of Special Levy applicable to banks. This will be calculated at 10% of taxable income (Chargeable Income) instead as a proportion of sales and profits. This new formula will apply in 2014 and 2015, at 2016, the formula will evolve. " Unfortunately, Levy on banks has been doubled. They pay 10% for the next two years. This decision is inconsistent with a low and uniform tax system. Although this will change in 2016, this is not a signal that goes in the right direction , "said Raj Makoond, director of the Joint Economic Council. Aisha Timol, Chief Executive of the Mauritius Bankers Association, said that this is the second time since 2007 that the Special Levy on banks has been doubled. " The fact that banks will have to pay 10% on Chargeable Income is almost equivalent to pay a tax of 25%, compared to other sectors that pay only 15% of Corporate Tax. This decision goes against low taxes and easy , "she says.

Following financial fraud related to Ponzi Schemes uncovered this year, the government is taking steps to better protect consumers and combat financial crimes. And it will establish a Serious Fraud Office, as suggested by several operators since lately. Moreover, the role of the Bank of Mauritius is increasing. The regulator will grant licenses to Credit Unions, issue directives and supervise. Until now, this was done by the Registrar of Associations. On the other hand, the composition of the Financial Stability Committee be expanded to include the Financial Intelligence Unit.

Exchange evolves

Regarding the offshore sector, while 60% of companies that are set up already targeting Africa, Budget encourages operators Global Business to turn more to Africa. In this regard, the Board of Investment will be part of this forcing on Africa. It will be called to set up a Financial Services Promotion Committee comprising representatives of the private and public sectors. A budget of Rs 50 million is expected in this regard.

The side of the Bourse, the Stock Exchange of Mauritius (SEM) has introduced a Sustainability Index which will include listed companies investing in sustainable development. SEM should also come forward with a new Social Impact Exchange, to develop Mauritius as a regional center for investment with a positive impact on society and the environment. For Vipin Mahabirsingh, Managing Directorde the Central Depository & Settlement, the creation of this social exchange is in line with the internationalization of SEM strategy: " This will help to attract more foreign companies and foreign investors in our market , especially those with 'Social Impact Objectives. The ability of the SEM and the CDS to rate, serve as a platform for exchange and settlement for securities denominated in dollar, euro, pound and South African rand will be a key factor in this regard. "