MAURITIUS: An Introduction to General Business Law

Introduction  

2019 saw Mauritius rank 13th globally in the World Bank’s Ease of Doing Business Report. This was an improvement of seven positions on the previous year. Against this backdrop, the country has been reinforcing its framework in relation to anti-money laundering and its co-operation with other jurisdictions concerning taxation.

Banking and Financial Services 

Amendments were made to the Banking Act and the Financial Intelligence and Anti-Money Laundering Act to improve technical compliance with the Financial Action Task Force (FATF) Recommendations on AML/CFT. Further reinforcements to the AML/CFT framework are expected in 2020.

The Bank of Mauritius and the Financial Services Commission are working on a central 'Know Your Client' (KYC) registry, so that customers are only asked for their KYC information once, with the aim of lowering the cost of doing business. The payment infrastructure has also been modernised through the implementation of the National Payment Switch, as a result of the enactment of the National Payment Systems Act. The system provides for a 24/7 digital payment system for the country. The platform makes banking, e-commerce and mobile payments interoperable and encourages cashless payment.

The main changes in relation to global business relate to substance requirements as a result of tax reforms. These have been made in order to comply with OECD Base Erosion and Profit Shifting (BEPS) Action 5 Report (Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance).

Fintech  

New regulations relating to virtual assets were published during 2019. The Financial Services Commission recognises virtual assets as an asset-class for investment purposes by sophisticated/expert investors. It also recognises securities tokens as securities represented in digital format. The issuing of securities tokens is regulated, with exemptions for sophisticated/expert investors. A licensing and regulatory regime applies to persons who solicit others to enter into transactions involving securities tokens. Custodians of digital assets are also regulated.

International Arbitration 

The Supreme Court set aside a USD120 million arbitral award made under SIAC Rules on grounds of breach of public policy (State Trading Corporation v Betamax 2019 SCJ 154). The decision is now on appeal to the Judicial Committee of the Privy Council (the country’s highest court of appeal).

In Peepul Capital Fund II LLC v VSoft Holdings LLC 2019 UKPC 47, the provision under the International Arbitration Act providing for appeals from decisions of the Supreme Court to the Privy Council “as of right” was recognised by the Privy Council. The Board, however, questioned whether such a wide right of appeal should continue to exist, or whether it should be subject to permission.

The year saw the relaunch of the MIAC arbitration centre. The rules for the centre are based on the UNCITRAL Rules. The MCCI Arbitration and Mediation Center (MARC) has also seen an increase in the number of international arbitrations it administers.

Insolvency and Restructuring 

The provisions relating to cross-border insolvency came into force in the course of 2019. These are modelled on the UNCITRAL Model Law on Cross-Border Insolvency. The existing law was also amended to provide for caps or upper limits to the fees which liquidators and receivers may claim for the realisation of company assets. Finally, the Insolvency Act was amended to provide that appeals do not operate as an automatic stay of insolvency proceedings. A stay will now have to be sought from the court. This has removed a significant amount of the uncertainty which previously existed, in practice, as to the existence or not of such as stay when a party appealed from a first instance decision in insolvency proceedings.

Intellectual Property 

Legislation (in the form of the Industrial Property Act) was passed aimed at modernising the industrial property framework in Mauritius, promoting innovation, facilitating the registration of industrial property rights, and creating better conditions to attract high quality investment. The law extends protection to all the components of industrial property, namely: patents; trademarks; industrial designs; utility models; plant breeders’ rights; geographical indications; and layout designs of integrated circuits. It was drafted with the assistance of the World Intellectual Property Organization (WIPO).

Real Estate 

The existing Invest Hotel Scheme (IHS) and Property Development Scheme (PDS) have been maintained. These allow non-citizens to acquire property in Mauritius. The IHS regime applies to rooms or villas in hotels, whereby the buyer is sold a room or villa in a hotel which operates under the scheme and may occupy it for a certain period of time during any given year. For the rest of the period, the buyer (or owner) has a return on investment as a result of the use of the room or villa by the hotel to accommodate its guests. The PDS scheme applies to residential villas or apartments. Both schemes come with residential permits for owners and their immediate families.

Taxation  

The past year has seen the government initiate a number of tax incentive schemes, with tax holidays. These include: an eight year tax holiday for companies on income derived from intellectual property assets developed in Mauritius; a five year tax holiday for setting up an e-commerce platform; a five year tax holiday for peer-to-peer lending operators; a four year tax holiday for income derived from bunkering low sulphur heavy fuel oil; and an eight year tax holiday for newly set-up companies developing a marina. Other tax incentives include taxation of freeport operators at 3% on profits derived from the sale of goods on the local market and parties attempting mediation or arbitration being allowed a deduction from taxable income of an amount equivalent to 150% of the case filing fee. As stated above, tax reforms have been made to include substance requirements in line with the OECD BEPS Action 5 Report.

Conclusion  

While the country strives to improve its competitiveness on the international scene as a jurisdiction for investment and business, it continues to make efforts to improve the standard and quality of regulation and its level of compliance with international standards.