Mauritian firm Ireland Blyth says Indian tax rules affecting investment
Mauritian conglomerate Ireland Blyth IBLP.MZ says uncertainty over new tax rules by key trading partner India has affected its business by putting off investors using the Mauritius financial center to invest in India.
Nicolas Maigrot, chief executive of the group which has a wide range of interests in financial services, retailing, logistics, aviation and shipping, and fishing, said on Thursday Mauritius needed to specify how the island will be affected by new Indian tax measures due to take effect in April 2016.
The general anti-avoidance rules (GAAR), aimed at companies and investors routing money through alleged tax havens such as Mauritius, had been scheduled to be implemented from April 2014, but was delayed for two years.
Mauritius says it is not a tax haven, because it imposes a 15 percent tax rate. But it does not tax capital gains.
The decision to delay the rules got a positive market reaction in India, with investors betting this would likely help attract more capital inflows. India gets nearly 40 percent of its total foreign direct investment inflows through Mauritius, besides large portfolio investments.
“Over the last two years we have lost a lot of business from India. Newcomers joining the market are not from India anymore. They are from other countries like Africa and Europe,” Maigrot told the Reuters Africa Summit.
“This is why we are saying that discussions over the tax treaty should be clarified and also we should know exactly what will be in the GAAR. This situation has resulted in an important shortfall for our business,” he said.
Maigrot said the delay in clarifying how the new rules would affect Mauritius had led some potential investors to bypass Mauritius for other destinations.
“They are going to Singapore,” he said.
Separately, Maigrot said Mauritius’s retail sector had become more competitive with the entry of other companies to the sector “putting a lot of pressure on our margin”, he said.
“The environment will remain highly competitive in Mauritius. IBL’s strategy is to go beyond boundaries and develop activities which will be stable in the long term. This is why we are in Gabon and Uganda,” he said.
IBL’s pretax profits for the six months ended December rose 5 percent to 435 million rupees ($14.4 million), helped by a stronger performance in its commerce and logistics, aviation and shipping businesses.
The group also has interests in Uganda, where it has a joint venture with a local partner in a meat processing plant, and Gabon, where it has a partnership with the government to manage a shipyard and seafood business.