Policymakers policies , in consultation with the Global Business operators must specify the position of Mauritius by international tax rules formulated by the Organisation for Economic Co-operation and Development (OECD). This is the conclusion of an organized workshop, Thursday, April 7, by Juristconsult Chambers at the hotel Labourdonnais, in Caudan. OECD regulations designed to fight against the erosion of the tax base and profit shifting (BEPS).
The project, strongly supported by the G20, should be adopted next year. 90 other countries (Editor's note: non-members of the G20 and the OECD) will meet next May to clarify their position on their commitments to the proposed solutions to eliminate gaps which remain in the current international regulations.
" I do not speak for the government, but we will discuss the issue among industry professionals and the state, particularly the Ministry of Finance, to take a position on the various achievements of the BEPS " has to Rajesh Ramloll immediately stressed, president of the International Fiscal Association (IFA) and Deputy Solicitor General.
Changing business models
Rajesh Ramloll considers that there is no reason to rush Mauritius to comply with the regulations. He recalled that after World War II, the economic models used by large companies have quickly evolved. These have relocated their domicile to countries where they pay less tax.
" Today, when Europe and the United States are facing economic crises, the OECD is expected to formulate regulations to increase revenue. These measures also had the blessing of the G20 countries just three days after their formulation. What a strong political statement ?! It seeks to recover USD 100 billion to USD 240 billion in revenues in terms of taxes, between 4 and 10% of revenues from the tax on large multinationals in the world , "Rajesh Ramloll said.
Of the 15 measures recommended by the OECD, one relates to the replacement of bilateral treaties by a single multilateral instrument, the MIL. " Maurice maintains 43 bilateral treaties and there are thousands in the world. It is impossible that MIL can override or repeal all the treaties. Moreover, they are also listed in the domestic laws of a country , "said include the president of the IFA.
The stake in the treaties based on the inclusion of the concept of Limitation on Benefits (LOB) and Principal Purpose Test (PPT), to prove the domiciliation of an entity. Johanne Hague, partner at Juristconsult Chambers says that the LoB is essentially based on the majority percentage of direct or indirect benefits to shareholders of the entity. This is not feasible in the case of Mauritius, where most of the entities Global Business owners are not Mauritian residents. However, the PPT is more subjective. He handles cases individually and asks whether an entity has chosen a court only for benefits related to a treaty.
Marc Hein, Head of Practice of Juristconsult Chambers stressed that as part of the diversification of the market, we must remain vigilant in the negotiations, keeping in mind that about 65 to 70% of funds managed in Mauritius concern India. The majority of Category 1 entities are related to the Great Peninsula.