MAURITIUS: An Introduction
Strategically located in the Indian Ocean at the crossroads of international investments, Mauritius has seen remarkable and unprecedented growth throughout the last decade and remains one of the most attractive international financial centres. Leveraging the recent establishment of the African Continental Free Trade Area, state-of-the-art infrastructure, a modern and innovative legal framework, and ease of doing business regime, Mauritius remains a hotpot for global investment and an attractive choice for global companies seeking a foothold in Africa and Asian markets.
Today, Mauritius continues to be one of the world’s fastest-growing economies according to the IMF’s World Economic Outlook report (October 2023), mainly capitalising on its political, social and economic stability, harmonised tax environment and sophisticated international financial centre of substance.
Economic Overview
Mauritius is poised to strengthen its position as the jurisdiction of choice for fund managers and institutional investors seeking to invest in African and Asian markets. Mauritius positions itself as a risk-mitigating platform and a treaty-based jurisdiction through its wide network of 30 investment promotion and protection agreements and 46 double taxation avoidance agreements currently concluded and which are in force. One of Mauritius’ key attractions is the absence of foreign exchange control and withholding taxation, facilitating the unrestricted repatriation of capital gains, profits, and dividend distributions earned by foreign investors in the country.
The IMF, in its aforementioned World Economic Outlook report, has projected global growth of 3.0% for 2023 and 2.9% for 2024. Based on the policy measures announced in the National Budget Speech 2023/2024 and taking into consideration that tourist arrivals are expected to make a full recovery to pre-pandemic levels in 2024, real GDP in Mauritius is forecast to grow by 7.1% instead of 6.8% as forecast in September 2023.
Legal Framework
Mauritius has an unconventional hybrid system of legal jurisprudence, combining the French Napoleonic Code with a strong influence of colonial English Common Law. The Supreme Court, as the superior court of the island, has unlimited jurisdiction to hear and determine any civil or criminal proceedings under any law other than a disciplinary law and such jurisdiction and powers as may be conferred upon it by the Constitution or any other law. Mauritius has, after acceding to the status of Republic, retained its final right of judicial recourse to the Judicial Committee of the Privy Council of the United Kingdom, which remains the highest appellate court of the country.
Arbitration in Mauritius has evolved to address the need for efficient and specialised dispute resolution, offering an alternative to litigation, as enshrined in the International Arbitration Act 2008. This mechanism’s appeal lies in its inherent advantages: confidentiality, time and cost effectiveness, and a streamlined process, all of which prove particularly attractive to international investors seeking swift and discreet resolution of legal disputes.
Latest Developments in Mauritius
The Financial Crimes Commission
The Financial Crimes Commission Act 2023 (the “FCC Act”) received presidential assent on 21 December 2023 and will be proclaimed by Parliament in the near future. The FCC Act establishes the Financial Crimes Commission (FCC) as the primary specialist agency responsible for investigating and prosecuting financial crimes in Mauritius. These crimes include corruption, money laundering, fraud, financial aspects of drug dealing, and related ancillary offences. The FCC will consolidate the powers and functions of three organisations: the Independent Commission Against Corruption; the Asset Recovery and Investigation Division of the Financial Intelligence Unit; and the Integrity Reporting Services Agency.
It is envisaged that this will create a centralised, robust, and streamlined framework in order to effectively fight against financial crimes.
Environmental, social and corporate governance (ESG)
At the outset, it is important to acknowledge that whilst a comprehensive regulatory framework to govern sustainability efforts in Mauritius is still evolving, Mauritius has already made significant strides in positioning itself as a sustainable international financial centre of substance. Notably, the National Budget 2022/2023 outlined a sustainability roadmap for Mauritius, including the launch of a Sustainable Finance Framework on 1 September 2023.
Furthermore, the National Budget 2023/2024 aims to go further by announcing a number of initiatives to promote gender equality, including the introduction of mandatory nursing rooms in shopping malls, offices and hotels and workplace-based childcare facilities for all companies employing more than 250 employees. The government has also announced a measure that mandates a 25% female representation on boards of all listed companies. In addition, ESG-related investments will now be covered and benefit from incentives under the Premium Investor Certificate, and the Bank of Mauritius has announced the development of a Carbon Trading framework for both blue and green credits.
These initiatives, aligning the jurisdiction with global trends, will act as key catalysts for the greening of Mauritius’ economy and help position Mauritius as a sustainable international financial centre of substance.
Fintech
Mauritius is one of the first countries in the Eastern and Southern African region to have adopted a comprehensive regime to regulate virtual asset services providers and issuers of initial token offerings conducting business in or from Mauritius. To further solidify the crypto regulatory landscape, the Financial Services Commission (FSC) released a set of robust rules to support the Virtual Asset and Initial Token Offering Services Act 2021. Recently, the FSC has clarified its regulatory stance with regard to the regulatory treatment of non-fungible tokens (NFTs), stablecoins and decentralised autonomous organisations (DAO). In the same vein, the Bank of Mauritius released a public consultation paper and is making significant strides in launching the much anticipated Central Bank Digital Currency: The Digital Rupee.
To further develop Mauritius as a fintech hub, Mauritius is expected to develop a National Fintech Strategy, set up a Fintech City and improve access to capital and seed investment opportunities for fintech start-ups in Mauritius.