The latest episode of Taxcast, a podcast by the UK-based Tax Justice Network, has got many in the financial services of Mauritius on their toes – after several speakers declared the island as a ‘tax haven’.
Small islands, according to show host Naomi Fowler, are particularly well suited to become tax havens and secrecy jurisdictions.
“Because in small islands, elite groups of people are also small. And the financial and political engineering to set these things up almost always comes from outside, in partnership with these few island elites. What they do together may benefit them, but their actions have a disproportionate and harmful effect on millions of people across the world. That’s certainly the case with the island nation of Mauritius,” she said.
Extracts of the show, entitled “The Making of tax haven Mauritius”, have been published in local media.
Mauritius, she added, is “far from a big global player” in terms of financial secrecy compared to other jurisdictions like the United States, Switzerland, Britain and Singapore.
“But it’s a much more significant global player in terms of helping multinationals underpay corporate income tax – it’s ranked 15th in our Corporate Tax Haven Index. It’s got tonnes of tax exemptions and almost non-existent transparency requirements for corporate reporting. The consequences really are deadly for ordinary people worldwide – particularly Indians and Africans,” she added.
Tax Justice Network researcher Rachel Etter-Phoya (from Malawi) claimed that Mauritius inflicts an estimated two and a half billion dollars of lost taxes on other countries every single year.
“And the irony here is that Mauritius markets itself as the gateway to Africa for investment. But really, I think we should be calling it the ‘getaway from Africa’ and for the amount of profits that are shifted out to the rest of the continent as a result of tax haven Mauritius.”
“Of course, Mauritius is also losing out thanks to the setup of tax havens and plundered states that is our global financial system. Mauritius does get a taste of its own medicine. Mauritius is losing an estimated 450 million each year to tax havens.”
The Taxcast show not only criticised the offshore and taxation, but also the Mauritian government.
“While Mauritius does well on almost every indicator, it has faced some criticism in regards to political leadership, as almost every prime minister has come from one of a handful of elite families,” it said.
“The country has also passed a few questionable bills into law, widespread accusations of voter fraud and foreign influence in the 2019 elections, multiple suspensions of parliament and, quite recently, the deployment of military police on protestors who were peacefully protesting. Therefore, we think it’s fair to say that while Mauritius was a model for the African continent a year ago, if it doesn’t fix up some major issues, it may soon lose its full democracy status,” Naomi Fowler said.
Mauritius is not a ‘tax haven’
The Chairman of the Financial Services Commission and First Deputy Governor of the Bank of Mauritius, Mardayah Kona Yerukunondu, has insisted that Mauritius is not a ‘tax haven’.
After much efforts to strengthen its anti-money laundering and anti-terrorist financing mechanism, Mauritius is compliant with the 40 international recommendations of the Financial Action Task Force, he said.
However, many financial scandals dating back to before its inclusion on the grey list have resurfaced.
“This is tarnishing the jurisdiction’s reputation”, Mardayah Kona Yerukunondu told Business Magazine.
He also spoke about the ongoing diversification process in the financial sector with a focus on value-added products and services.
Sources: Taxcast, Defi Media, Business Magazine
