Mauritius shrugs off tax haven tag: OECD says ‘largely compliant’
A worldwide survey by Paris-based OECD (Organization for Economic Cooperation and Development) has identified the much-maligned island economy as ‘largely compliant’ with global tax laws. (Image: Tax Justice Network)
Mauritius is having the last laugh as it has found external backing for its claims that it is a low-tax jurisdiction and not a tax haven.
A worldwide survey by Paris-based OECD (Organization for Economic Cooperation and Development) has identified the much-maligned island economy as ‘largely compliant’ with global tax laws.
Mauritius has for some time been under Indian scrutiny as a major hub for flow of untaxed funds, resulting in stringent negotiations over the tax treaty between the two nations. With a globally renowned organization such as the OECD vindicating Mauritius as a low cost jurisdiction, the tide may turn in favor of the island economy.
However, the tide has certainly turned against the neighboring island of Seychelles which now finds itself on the wrong side of global tax laws. The global crackdown on illicit funds has left just three other jurisdictions – Cyprus, Luxembourg and British Virgin Islands – in the red coded category of ‘non-compliant’.
Four color codes have been used to signal the compliance category of the 50 jurisdictions rated by OECD on tax compliance. A total of 18 jurisdictions are coded green signifying ‘fully compliant’, another 26 (including Mauritius) are colored yellow indicating ‘largely compliant, while two are amber-hued indicating ‘partially compliant’ and four find themselves in the ‘red’ for non-compliance.
Jurisdictions that are ‘compliant’ include India, Australia, Belgium, China, Finland, France, Isle of Man, South Africa and Spain while Turkey and Austria have been found to be partially compliant.
Those interested in finding out which side of the fence will Switzerland find itself will have to wait a little longer. The Scandinavian country, recently identified as the least financially transparent nation on the Financial Secrecy Index, continues to be shrouded in secrecy as it is yet to be rated on this scale. However, the country has just signed a global convention on automatic exchange of information on tax issues and will come under OECD’s lens soon.
Besides Switzerland, 13 other additional jurisdictions have not been given compliance ratings, pending further improvements to their legal and regulatory frameworks for exchange of information in tax matters, OECD said.
As part of the worldwide crackdown on black money, the OEDC-led global forum carries out regular reviews of select jurisdictions on three pillars – availability of information, access to information and exchange of information. In the first phase, a jurisdiction’s legal and regulatory framework for exchange of information in tax matters is reviewed. In the second phase, the application of this framework is looked into.
The global forum brings together 121 countries and jurisdictions for wide-ranging discussions on transparency and exchange of information. To date, 124 peer reviews have been completed, including 50 Phase 2 reviews.