Mauritius: Focused On Finance

Last Updated: 8 March 2017
Article by Kervin Victor

Fending off charges that the country is a tax haven, the government of Mauritius is looking for ways to improve governance, attract investors and diversify sources of revenue as the days of the country's billon-dollar ties to India come to an end

Of all the countries that trumpet themselves as the 'Singapore of Africa', Mauritius probably has the strongest claim. It has a solid education system, a robust banking system and stable politics, all of which attract investors. But, while the glittering white sands and rolling turquoise sea beyond buoy the spirits, there may be storm clouds ahead for the island. It will need to shake off concerns about governance if it wants to stake its claim to a greater share in the logistics of global capital.

Three significant challenges lie ahead: fighting off repeated accusations of laundering dirty money; the end of the tax break to investors in India; and the issues raised by local corporate governance, such as the 2015 collapse of the British-American Investment Company (BAI)and the recent dismissal of the chief executive of Air Mauritius.

Mauritius is a regular target of international tax-justice campaigners. The most recent criticism comes from the non-governmental organisation Oxfam, which published the report 'Tax Battles: The Dangerous Global Race to the Bottom on Corporate Tax' in December2016. In the Oxfam report, Mauritius ranked 14th out of 15 tax havens across the globe. The administration of Prime Minister Anerood Jugnauth is trying to clean up the country's image and promote transparency. To this end, the government created the Ministry of Financial Services, Good Governance and Institutional Reforms in December 2014. Its minister, Roshi Bhadain, tells The Africa Report that he was entrusted with a clear mission: "I had to ensure that the fundamentals of good governance were adhered to and [bring]much-needed reform."

The country introduced an Organisation for Economic Cooperation and Development initiative called the Common Reporting Standard on 1 January, with the first reporting to begin in July 2018. Ravneet Chowdhury, chief executive of Bank One in Mauritius, says: "That will automatically give account balances for non-residents from most major countries around the globe [...] which should make things much cleaner."


But since the arrival of Alliance Lepep, an alliance of three political parties, in 2014, the Mauritian financial sector has been shaken by a more serious challenge: the end of a lucrative tax arrangement with India that helped investors into the subcontinent avoid paying Indian capital gains tax. The double taxation avoidance treaty had bolstered the financial sector for more than 30 years and was responsible for billions of dollars of investment In India. Upon the Indian government's insistence, in 2016 Jugnauth's government agreed to amend the treaty to make using the Mauritius route less attractive (TAR82-83 July-Aug 2016).

Most operators in the Mauritian offshore sector have criticised the decision. Kamal Hawabhay, director of Global Wealth Management Solutions, says: "With India, there is virtually no new business." However, Mauritians keen to mirror Singapore's success will be happy to note that Singapore itself had a double taxation agreement with India that was amended in New Delhi's favour in 2016.

Mauritius is focusing on diversification to fill the gap left by this amendment, which some operators had seen coming. Last year, 58% of structured investments in Mauritius were routed to Africa, according to figures from the Financial Services Commission. Structured investments in India accounted for only 9%.

The government has crafted several laws offering new avenues for the financial services industry. The sector is creating new services in captive insurance, global headquartering, treasury management and overseas family offices.

The third obstacle the country needs to overcome in its bid to become a financial hubis domestic governance concerns. As the forced liquidation of the conglomerate BAI – after the government accused it of running a Ponzi scheme – shows, there are still problems to fix.

The surprise October dismissal of Air Mauritius chief executive officer (CEO) Megh Pillay in questionable circumstances highlights other challenges in corporate governance. As a company listed on the stock exchange, Air Mauritius is supposed to follow local best practices in terms of good governance.

However, Pillay was sacked following differences with Air Mauritius chairman Arjoon Suddhoo, who is known to be close to the government. There were many faults with the dismissal: the meeting of the board was attended only by the members representing the government and it was called in the morning for the afternoon of the same day.

The sacking provoked an outcry, and the government was divided. Good governance minister Bhadain says: "As far as Air Mauritius is concerned, I cannot comment on the substance of this case, which comes under the administration of a listed company. In the form, I think the CEO's contract has been terminated in a way that is not in accordance with the principles of good governance."

Member of parliament Sangeet Fowdar says that the recent event at Air Mauritius is not the norm: "Most of the chairmen of the board, they are not chairmen of the company and they do not interfere in the day-to-day operation of the organisation." Bank One's Chowdhury also points out that Mauritius has regularly been at the top of various African governance rankings, from the MoIbrahim Foundation's to the World Bank's. The latter endorsed the original Code of Corporate Governance in its governance evaluation of the country. Nevertheless, this code is now more than 12 years old.

The government hired expert Chris Pierce, CEO and founder of Global Governance Services, to propose new corporate governance standards, which were adopted in 2016. Pierce explains: "If Mauritius wishes to maintain its position in the [Ibrahim] Index of African Governance, it must continuously improve its governance practices since other countries are catching Mauritius up!"

Pierce says all public-interest entities and other entities required to report on corporate governance will need to apply all the principles contained in the new governance code and to explain in their annual reports how these principles have been applied.


Former Bank of Mauritius governor Dan Maraye says the new guidelines are a step in the right direction, but he adds that the code of corporate governance will not help increase transparency in companies where the state is the major shareholder. "We often hear ministers refusing to divulge information when answering parliamentary questions on these entities, arguing that they are private companies. We should seek a solution for this," he says.

Maraye adds that this code will not work because it is based on the principle of voluntary compliance. "[It] should be imposed on institutions by law. Otherwise, we will simply be wasting our time. In most parts of the world, such codes are voluntary and we have seen how institutions were gripped by crisis," he adds.

Annabelle Ribet, a legal executive with international lawyers Juristconsult, explains that Mauritius's business code is on a par with those of other sizeable financial centres: "Voluntary codes are increasingly being adopted worldwide because they are seen to be flexible instruments. There is some degree of non-compliance with the provisions, which is expected, in contrast to the more rigid and mandatory nature of legislations."

Minister Bhadain says that the government could modify the law to address problems of non-compliance. "When you issue a code of best practice, you expect people to follow it. Now of course, if there are material departures from the code in terms of non-compliance and chairpersons and chief executives are not acting as they should, then that will be the logical next step and we will come [...] with amendments to the Financial Reporting Act," he says.

Originally published in the africa report n° 87, February, 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions