Mauritius Employment Act Update - The Workers’ Rights Act 2019
12 December 2019
What strikes you most about Mauritius is the friendliness and professionalism of the people, burgeoning infrastructure, the stunning scenery and fabulous weather. An island deep in the middle of the South West Indian Ocean without substantial natural resources requires ingenuity, education, a forward looking Government and playing to natural strengths to grow and survive.
Mauritius has shown these traits in abundance resulting in one of the highest level of income per capita in Africa.
An important plank of this success has centered on the development over the past 25 years of a first class International Financial Centre which has resulted in the direct employment of around 15,000 people. Reflective of the highest number of qualified accountants per capita in the world the quality of the people working in the IFC is aligned with the best anywhere.
The ability for international investors to have a secure, stable, well regulated jurisdiction with English and French language skills and no exchange controls through which investments could be safely channeled into emerging markets should not be underestimated. This flow of capital through Mauritius over the past 25 years has been instrumental in bringing tens of millions out of poverty in India and Africa. Without Mauritius acting as a credible facilitator it is unlikely that such levels of foreign investment would have happened into India and the African continent.
Today, we continue to see such channeling of investments through Mauritius into the African continent and India. It should be noted that such investment is not necessarily driven by tax benefits to the investors but rather is based on the non-tax advantages of Mauritius. Indeed, a substantial part of the investment into Africa from Mauritius has gone to countries where there is no tax treaty in place with Mauritius.
Not quite! There are a number of challenges to the continued growth of the IFC but fortunately in true fashion, Mauritius is rising to the challenge.
Mauritius is rated fully compliant by the OECD and other standard setting institutions and the moniker of offshore tax haven is simply incorrect. Over time perhaps Mauritius has not put its best foot forward to convey this message into the international market place. However, significant moves are underway to radically improve the image of the IFC abroad through the engagement of a world renowned PR firm, trade missions and the industry working closer to deliver a coherent message in publications, conferences and with its extensive client list.
Most audit and larger financial services firms now offer shared services to both internal and external partners on the island due to the abundance of qualified accountants and well managed operations. The flows of such business onto the island is increasing the demand for staff and leading to wage inflation in the market. It is important that the industry and the educational establishments on the island work together to ensure that the flow of qualified individuals into the market place continues.
The Government should give serious consideration to providing work permits to foreigners to meet specific skill shortages.
Overall, we expect the Financial Services industry in Mauritius to continue to be the IFC of choice for international investments into India and Africa.
The industry needs a cohesive and effective consulting body which will work with the FSC, Ministry of Finance and EDB in a far more proactive manner than previously. The IFIA in Ireland or ALFI in Luxembourg should be used as role models.
The future growth for the Mauritius IFC coming from the following areas:
§ Shared services model where work particularly the production of Financial Statements is routed to Mauritius by international parties to avail of the level of expertise on the island and to likely enjoy lower costs. With many well qualified financial and legal graduates coming out of university annually we have an abundance of talent to assist markets such as Luxembourg and Ireland which struggle to obtain sufficient talent.
§ Despite changes to the Indian/Mauritius tax treaty which in ways have had unintended negative consequences for Mauritius, India remains the most important market we have. The use of Mauritian feeder funds to help aggregate international investors prior to investing into Indian Alternative Investment Funds works particularly well for all parties and continues to grow.
§ Africa is becoming more important for Mauritius. The use of holding companies in Mauritius is greatly facilitating direct investment into multiple African markets.
The forthcoming introduction of the Special Purpose Fund will bring Mauritius in line with similar products in other key IFC’s such as Ireland, Luxembourg and Cayman.
The industry needs to work with governmental bodies in a more collaborative fashion to continue to deliver the positive message of Mauritius and the clear advantages it brings to international investors seeking investment in Africa, Middle East and Asia.