Economic ExpertSpeak: Mauritius global businesses uncertain over India tax treaty
Oliver Hare, CEO of Cim Global Business, spoke to AfricaMoney on the way forward for the global business sector in Mauritius, which is currently facing challenges on the back of the prevailing uncertainty over the tax treaty with India. (Image: Company)
Oliver Hare, CEO of Cim Global Business, spoke to AfricaMoney on how the global business sector in Mauritius is expected to continue to face challenges with the uncertainty over the Double Taxation Avoidance Agreement (DTAA) with India. Our financial expert also noted that Cim does not set up structures which are just tax treaty driven but offers the full substance by assisting clients in finding a location, recruiting their employees, administering payroll and supporting IT functions, among others.
Edited excerpts from an exclusive interview:
Could you please comment on the performance of Cim Global Business?
Cim Global Business is one of the largest local providers of fund, corporate and fiduciary administration services. Our client base is composed of some of the largest sovereign wealth, private equity and fund groups and we are looking to upgrade the range of services for these clients from both Mauritius and Singapore.
Considering the challenging economic environment of the last few years, our Global Businesses has performed satisfactorily and we expect to maintain the same trend over the coming months. Nevertheless, the sector will continue to face challenges with the uncertainty over the Double Taxation Avoidance Agreement (DTAA) with India, as well as the General Anti-Avoidance Rules (GAAR). New ways of remaining competitive in emerging regional markets will have to be explored. We are confident that the diversification plans of our markets and range of products will strengthen our value proposition and position Cim as a key financial partner.
With offices in Mauritius and Singapore and as many as 5 main companies, how complex is it to manage such a vast global presence?
Cim Global Business operates in Mauritius and Singapore, administering more than 2,000 global business entities engaged in cross-border transactions. Our global and regional presence, along with a convenient time zone, allows us to have a good business network across the globe. We have a wide client base which include Fortune 500 companies, Forbes listed, high net worth individuals, major development financial institutions, top fund managers and institutions, as well as start-up fund managers and family businesses.
Our Singapore office remains competitive and is expanding fast. Singapore has developed itself as an excellent financial sector in Asia and is competing head on with Hong Kong. Singapore is seen as the gateway to Asia. We do offer the various services that fiduciary service providers offer but our edge is service and the huge back office support in Mauritius, highly qualified professional consisting of qualified accountants, lawyers and financial analysts, leading edge technology, rigorous compliance service and a tax department that forms part of a worldwide network called Taxand. No other service provider has this type of a comprehensive offering, thus we have a slew of differentiating factors that make us competitive.
Recently, Cim Finance tied up with Union Pay International to pioneer the issue of UnionPay credit cards in Africa. How is Cim Global Business planning to leverage this initiative to expand its presence in the continent, as well as at a global level?
Mauritius is the gateway to Africa, with its plethora of tax and non-tax rationale such as Investment Promotion and Protection Agreements (IPPA), modern legislative framework and no foreign exchange control, to name a few. Based on the Financial Services Commission (FSC) figures of more than 50% of structures set up in Mauritius in 2013 being aimed at Africa, Cim Global Business has not remained complacent and we have seen an increased number of structures targeted at Africa. You may note that we do not set up structures which are just tax treaty driven. We provide the full substance offering as we assist our clients in finding a location, recruit their employees, administer payroll and support for IT, to name a few of the services that we provide.
Following a recent trip to the Middle East and Asia, we are also aware of growing interest in the use of Mauritius as a trading hub for their African operations. There may not be an immediate flood of such entrants but we need to keep encouraging clients to look at these opportunities. And of course, we are exploring new jurisdictions and we are looking to upgrade the range of services we provide to our existing and potential clients.
In 2013, the government announced the renegotiation of the double taxation avoidance treaty between South Africa and Mauritius while the India-Mauritius tax treaty is already under negotiation. In the context of Cim providing tax and regulatory advisory services, what is the expected impact of this development on Cim, and are the effects already being felt?
A treaty is a bilateral agreement between two countries and these are subject to renegotiation due to the current economic, social and cultural ties that are in place. Indeed, the SA treaty has been renegotiated in view of the fact that SA has introduced withholding tax on dividends which was not in place before. To accommodate the same, the Mauritian Government has agreed to renegotiate. It has to be noted that the treaty is yet to be ratified. As far as the Indian Treaty is concerned, the emphasis is on inserting a Limitation of Benefits (LOB) clause in the treaty. This will enhance the presence of companies using the jurisdictions as well as companies under our administration. For Cim, we believe that this would be value added to both the client and our company.
How are the plans to diversify into fast growing markets such as Africa going on, and how far is the reputation of Mauritius as a global financial hub helping your company foray into the continent?
The Cim Group has a very interesting diversification in the customer bases of our two core clusters which gives our shareholders the opportunity to benefit from largely local consumer related revenues in our Finance business and overseas institutional revenues in our Global Business. This is indeed and an interesting mix and we are seeing some beneficial cross-selling opportunities that had been somewhat overlooked in the past.
Mauritius has a solid reputation as an international financial services hub and has maintained its first position in Africa and 20th place worldwide on the World Bank’s Ease of Doing Business report 2014. Mauritius came out on the Organization for Economic Cooperation and Development (OECD) listing as largely compliant. Besides, institutions such as the FSC, MRA (Mauritius Revenue Authority) and the BOI (Board of Investment) have been extremely proactive and I think this helps Mauritius enormously as a jurisdiction. The efforts to promote Mauritius in terms of efficiency and transparency can only benefit our company to expand our African and global footprint.
Finally, please provide your insights on the way forward for the company, both in Africa and in the rest of the world?
We are continuing our strategy of creating a broader global footprint to better serve our clients across the world while focusing on maintaining Mauritius as a cost-effective and efficient base for all of our operations.