MAURITIUS: E-COMMERCE

Introduction

Mauritius encourages information technology operations, and the territory has invested heavily in state-of-the-art telecommunications with clear interest being shown in offshore e-commerce development.

The Mauritius government marked the 2001 New Year with a commitment to turn the country into an Information Technology Free Trade Zone complete with the creation of digital parks across the island. The digital parks will offer state-of-the-art technological facilities which will meet the needs of IT businesses. A series of fiscal incentives to both foreign and domestic businesses will be on offer.

In January, 2001 then Deputy Prime Minister Paul Berenger announced the setting up of an Infocom Development Authority to promote investments in information technology and to regulate the sector. According to Berenger, the new authority would take care of both the Mauritius Telecommunications Authority and the National Computer Board.

In 2002 the Mauritius Minister for Information Technology and Telecoms at the time, Geehad Geelchand outlined the advantages for international businesses and IT companies who choose to locate on the island, saying that Mauritius had become the centre of a new submarine cable optic fibre connection designed to link Portugal to Malaysia via the island.

He also revealed that in addition to tax incentives, IT companies choosing to locate in the jurisdiction would also be able to take advantage of electricity at preferential rates, the opportunity to acquire property and land, and permanent resident status.

Speaking in December, 2002, Mauritian Finance Minister, Sushil Kushiram announced that the Indian Government would be assisting in the e-development initiative, providing a credit line of $100 million to finance the development of the Mauritius 'cyber city'.

Construction began in earnest in 2004 under the control of Business Parks of Mauritius (BPML) — a private company in Mauritius — and the Mauritius government.

The Cyber Tower, a central feature of the Ebene Cyber City, was inaugurated in April, 2005.

In April, 2006, the Prime Minister, Navin Ramgoolan, inaugurated the new offices of offshore management company International Financial Services in the Ebene CyberCity, expressing strong support for the e-commerce sector.

The Prime Minister paid tribute to the professionalism, the application, and the entrepreneurial and innovative qualities of the directors of IFS. Their efforts had made their company one of the leaders in their field, he said.

However, he criticized the Financial Services Promotion Agency (FSPA), which he said had not done all it could to position Mauritius at the forefront of the developing e-commerce sector internationally. He asked the FSPA to be more aggressive in marketing terms and to adopt creative strategies to attract more operators to the offshore sector.

The CyberCity has attracted about 25 operators at the time of writing. Built with support from India, and just 15 minutes drive from Port-Louis, the CyberCity has free zone status and offers tax advantages to its occupants. Spread over an area of about 172 acres, the Ebène CyberCity is divided into 7 zones, with each zone being provided with water, power, roads, drainage and other facilities. The entire CyberCity is wired with optic-fibre and copper cables to provide high speed international bandwidth on tap.

Mauritius has recently placed more emphasis on development of its offshore sector, and the Prime Minister said that he entirely supported the recent 'paradigm shift' of the Financial Services Commission (FSC) as regards the regulation of the offshore economy, which he said should be flexible and effective.

In October, 2006, Oracle, the global software and database company said it would establish a centre of excellence in Mauritius as part of a project aimed at promoting the development of the ICT sector in the jurisdiction.

The primary objective of the programme is to provide public officers, in particular from the Central Informatics Bureau and the Central Information Systems Division, with insight into the creation and maintenance of the Oracle database system.

The centre will be the first of its type in Africa.

The Oracle Training Programme for Database Administrators came about as a result of the Memorandum of Understanding (MoU) signed by the Ministry of Information Technology and Telecommunications and Oracle Systems on May 17, 2006.

The MoU provided a facilitation framework for the implementation of e-Government initiatives, the further development of ICT culture and enhancement capacity building in the sector as well as the adoption of best practices in ICT.

In 2006, value added generated by the ICT sector in Mauritius was R10.5 billion (USD341 million), more than double the 2000 figure of R4.5 billion, the government announced in a report on the sector in August 2007.

The contribution of this sector to the Gross Domestic Product was 5.8% in 2006. After growth of 6.4% in 2001, the sector registered double digit annual growth during the period 2002 to 2006. The growth rate in 2006 was 11.2%, compared to 18% in 2005.

According to the first issue of the Economic and Social Indicators report dedicated to the Information and Communication Technologies (ICT) sector, there were a total of 116 large establishments operating in this sector in 2006 compared to 52 in 2000.

In October 2007, the Mauritian cabinet approved a national ICT strategy, with the aim of elevating the jurisdiction towards the status of a regional technology hub over five years.

The National ICT Strategic Plan (NICTSP) 2007-2011 seeks to provide the right environment for the harnessing of ICT to generate employment, improve quality of life, and create new opportunities for the socio-economic development of Mauritius. The report identifies the primary targets to be achieved in two broad sectors, namely: Information Economy and Information Society.

The strategy's expected goals are a 7% contribution to the gross domestic product of Mauritius from offshore ICT export services, employment of at least 29,000 qualified individuals, employment of 90% of those who graduate in ICT, the doubling of the number of foreign investors, and Memoranda of Understanding for collaborative ventures in the field of ICT with countries in the region.

Other key objectives of the government's strategy include an increase in preference for ICT, with at least 50% acceptance for services available online, an increase in PC ownership by 20,000 households, and 12,000 PCs in primary schools, 150 Public Internet Access Points across the island, Internet connectivity and networking of all primary, secondary schools, and an increase in broadband penetration by at least 250,000.

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Mauritius E-Commerce Legislation

The key piece of e-commerce legislation in Mauritius is the Electronic Transactions Act 2000. Other important laws are:

The Information and Communication Technologies Act 2001;
The Information Technology (Miscellaneous Provisions) Act - Dec 1998; Telecommunications Act - Dec 1998; and
The Copyright Act - Sep 1997.

'The setting up of the appropriate legal framework,' says the Government, 'is essential for Mauritius to position itself to exploit the new opportunities of Electronic Commerce and enable our enterprises to participate more actively in the emerging global economy. E-commerce experience in other countries has demonstrated how important the legal infrastructure is as a foundation and catalyst to the development and acceptance of e-commerce. The Electronic Transactions Act (ETA) removes legal obstacles and establishes a more secure legal framework for business and governments to function in an environment of trust.'

The provisions made to enable government to adapt its own administrative procedures and processes to enable the e-government also demonstrate the commitment of the Mauritian government to the creation of an environment of trust where companies can feel safe and secure in conducting their online business.

Electronic Transactions Act - ETA

The work group responsible for the drafting of the Mauritian legislation examined the UNCITRAL Model Law and considered e-commerce legislation introduced in countries such as Singapore, UK and Australia.

The following guiding principles were adopted:

The need to conform to international standards and international models in order to be integrated with the global e-commerce framework;
The need to avoid over regulation;
The need to be flexible and technologically neutral to adapt quickly to a fluid global environment; and
The need for transparency and predictability.

The objects of the Act were to provide:

The Government said that Certification Authorities would play a vital role in facilitating secure electronic transactions as they provide the infrastructure for transacting parties in an electronic environment to authenticate each other's identities and ensure non-repudiation of electronic transactions through the use of digital signatures.

The ETA provides the legal framework for the establishment of a public key infrastructure (PKI) - also called trusted CA services - to faciliate the use of digital signatures in Mauritius. The ETA also makes provision for the setting up of a Controller of CAs to ensure that the integrity and standards expected from CAs are respected.

The Electronic Transactions Act also made provision for a voluntary licensing scheme for Certification Authorities (CAs) by the Controller of Certification Authorities (CCA).

The ETA provided for the appointment of a Controller of CAs. The Controller will, amongst other duties, license, certify, monitor and oversee the activities of CAs. Only licensed and approved CAs will enjoy the benefits of the legislation for signatures generated from the certificates issued. The exception to this is where parties agree to be bound by signatures created by a commercially reasonable procedure. Once set up, the Controller of CAs will lay down the administrative framework for licensing of CAs, the criteria for a CA to be licensed, and the continuing operational requirements after obtaining a licence.

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Mauritius Facilities

Telecommunications Providers

Until comparatively recently the monopoly telecommunications provider was Mauritius Telecom Ltd. In 2000 Telecom Plus, a subsidiary of Mauritius Telecom, was the sole ISP in Mauritius, offering access to the web, email and other Internet services facilities via its server Servihoo. However, in early 2001 Information Technology and Telecommunications Minister at the time, Pradeep Jeeha announced the liberalisation of Internet provider services in Mauritius.

By the end of 2006, the number of ISPs had grown to seven, and the number of internet subscribers had reached 137,500, compared to 35,000 in 2000.

The Information and Communication Technologies Authority (ICTA) was set up by Act of Parliament in late 2001. The ICTA is the successor institution to the Mauritius Telecommunication Authority (MTA) which was created in 2000 to regulate telecommunications in Mauritius.

The main objectives of the ICTA were defined, inter alia, as follows:

In 2001 UTStarcom, a provider of telecommunications access equipment, announced the completion of a deal to provide Mauritius Telecom with access network equipment for a next generation xDSL leased line nationwide data network.

Also in 2001, Mauritius Telecom started the installation of underwater fibre-optic cables in Bay Jacotet, in the South of the country, 40 km from Port Louis to house the SAFE fibre-optic network (South Africa-Far East) which would go from Cape Town. SAFE will in turn be linked in Cape Town to SAT-3/WASC (South Atlantic Telephone-West African Submarine Cable), which is 15,000-km long and links Europe to South Africa and Western Africa. SAFE would continue this connection over 13,800 km from Cape Town to Malaysia, linking Mauritius, Reunion and India on the way. The SAT-3/WASC-SAFE network goes from Sesimbra, Portugal, to Penang, Malaysia, connecting along the way India, Mauritius, Reunion, South Africa, Nigeria, Ghana, Cote d'Ivoire, Senegal and the Canaries. The network became operational in October 2001.

In January 2006, ICTA approved a considerable decrease in the tariffs of International Private Leased Circuits (IPLC), fixed line services, international calls and local calls in line with a government policy to make Mauritius more competitive internationally in the field of information and communication technology.

As a result of the changes, there was a reduction in International Private Leased Circuits (IPLC) rates applicable, with immediate effect, by Mauritius Telecom Ltd on the SAFE undersea cable ranging from 17% to 31%, with an overall average of around 22% on the existing rates.

Mauritius Telecom also, with immediate effect, cut tariffs in respect of International Direct Dialling (IDD) services by an average of 19.8%, while Emtel, Mahanagar Telephone (Mauritius) Ltd, City Call Ltd and Data Communications Ltd will cut their IDD services by margins of between 5% and 15%.

Meanwhile, City Call Ltd and Data Communications Ltd cut charges for Internet Telephony services by between 5% and 50%, also with immediate effect.

The ICT Authority also approved tariffs for new services, namely 3G for Emtel, and wireless Internet Services for Network Plus (Africa Digital Bridges Network Ltd.).

Go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background for offshore e-commerce.

The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore jurisdictions; while businesses that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

As a major offshore jurisdiction with many tens of thousands of offshore enterprises already installed, including many trading companies, it is only a matter of time before Mauritius becomes a centre of e-commerce activity. The island's geographical location between continents, its good telecommunications links, sophisticated business infrastructure and the low-cost, English-speaking, highly-educated work-force are all factors which will attract the sales, marketing and administrative departments of retail operations, particularly those trading into India and African countries.

By locating websites in Mauritius to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many case it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

A company operating an e-commerce facility in Mauritius will very probably choose International Business Company status, and may establish itself in the Export Services Zone or in the Cyber City, (see Offshore Legal and Tax Regimes) and will therefore have minimal local taxes to pay.

For information about the impact of e-commerce on a number of the main offshore activities which take place on the island, click on a link below to go to our specialist E-commerce site Offshore-e-com.com

Sales and Distribution of Physical Products
Sales and Distribution of Digital Products
Banking and Financial Services (including Investment Funds)
Corporate Support Functions

To see an analysis of the current state of legal and tax issues surrounding offshore e-commerce, click here.

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Mauritius Case Studies

This section will contain case studies of e-commerce solutions applied to offshore business activities carried out from Mauritius. The case studies will be developed in association with partners. Contact us to learn more.

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