|Pravind Jugnauth is a new entry this year|
Pravind Jugnauth has had a diverse political career and, since returning to the role of finance minister of Mauritius on May 26 2016, he has made strides in rebuilding its tax system through the renegotiation of tax agreements that has earned him a place on the Global Tax 50.
Between hosting the OECD's fifth Global Forum for Competent Authorities on July 7-8 and amending the infamous double taxation agreement (DTA) with India, Mauritius has made notable tax developments under Jugnauth's direction.
During his time as deputy Prime Minister from September 2003 to July 2005, and as finance minister, Jugnauth had reduced taxes on thousands of commodities. He also launched a programme to make Mauritius a duty-free island and is now tasked with rethinking the island's tax-centred approach to attracting capital inflows.
The signing of the protocol to amend the 1982 DTA between India and Mauritius was a landmark moment that put an end to treaty abuse and the round tripping of funds. The protocol signalled an end to the island's tax haven status and how investors take advantage of the tax benefits. Since the amended DTA with India, Jugnauth has been tasked with ridding the jurisdiction of its tax haven status to create a fair and competitive business market, which he is achieving. The DTA between Mauritius and India will enter into force on April 1 2017, but the treaty remains a concern for the Mauritian tax authority, as it poses a possible decrease in foreign investment. However, FDI forecasts indicate that Mauritius should not be negatively impacted.
Other notable advancements to increase cooperation in tax matters between Mauritius and other jurisdictions over the past year include the tax information exchange agreement signed with South Korea on August 11. The agreement will further develop trade and investment between the two countries.
Businesses see Mauritius as a hub for global trade and investment. The economy has evolved into an "international financial centre for excellence and repute," Jugnauth told the Financial Times. With the finance industry accounting for more than an eighth of the economy, it is vital that Jugnauth works at improving Mauritius to a successful global financial centre. The most attractive element of its financial industry to investors has, until now, been the offshore sector, which is built on a low-tax regime and an extensive treaty network.
Earlier this year, Jugnauth visited Brussels to meet with key EU decision makers to discuss EU tax initiatives, including transparency and exchange of information. The EU is one of the island's most reliable development partners.
Jugnauth built on his earlier efforts in 2016 when announcing the budget measures. Although this year's budget did not have many fiscal changes, Jugnauth proposed initiatives to improve the country's infrastructure, support local entrepreneurs through tax incentives and access to finance, and offer VAT exemptions on a number of products. However, EY's technical analysis of the budget criticised the perceived lack of consideration for a business restructuring exercise. Looking ahead, further work on improving this will likely continue behind the curtains but businesses should not get too comfortable with expected change inevitable.
Overall, during a speech at the opening of the OECD conference in July, Jagnauth said the government will continue to ensure that Mauritius maintains its good reputation as a "sound and well-regulated jurisdiction, while maintaining full engagement with our international partners and fulfilling our international obligations".
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