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Lowtax
Network Content Update | Issue XXXII | 24 April 2008 |
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Dear Colleague, This week:
I hope you find this update useful. Please remember that you can customise your mailing preferences by visiting your own profile page to choose from 29 offshore tax and law subjects in order to receive just the information you want. You can also unsubscribe completely by following the instructions at the bottom of this page. Kind regards, |
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Offshore
Mauritius is well located between India, Africa and Asia Mauritius has been an independent member of the Commonwealth since 1968, and became a republic in 1992. The mostly volcanic land area of 1,860 sq km lies east of Madagascar and has a population of 1,250,882 (July 2007 est.), with around 150,000 living in the capital, Port Louis. The climate is sub-tropical; average daily temperature ranges from 17 to 30 Celsius; it can be wet. The time zone is 4 hours ahead of GMT. The official language is English; the dominant ethnic group is Indo-Mauritian and the most popular religion Hindu. The Government is presidential, with a single elected National Assembly and a Council of Ministers headed by a Prime Minister. The legal system reflects mixed French and British ancestry, and administration can be bureaucratic in the French style. Tourism has become a major contributor to the economy. The airport has good connections with a wide range of countries. GDP per head of $13,500 (2006 est.) is in a middle range but growth has mostly been around 5% (4.3%- 2006 est.); and unemployment at 9.4% (2006 est.) is on the high side. . . .and its economic future is dependent on exports. Mauritius has quite good land so that sugar became and remains the dominant crop; it still accounts for one third of exports. Apart from encouraging tourism, the Government has tried hard to create a manufacturing sector with a range of investment incentives, free trade zones and a freeport. Garment manufacture has been a particular success. More recently, a financial services sector has developed, including a stock exchange, to take advantage of Mauritius' location offshore India and Africa. The Government is enthusiastic about e-commerce and has built a 'Cyber City'. The offshore sector is plotting a middle course. . . . Until 1998, the Offshore Company and the International Company (equivalent to an IBC) allowed zero taxation across a range of offshore activities including banking, shipping, insurance and fund management, as well as in the free trade zones. Since a raft of new legislation in 2001 these two types of company are known as Global Business Companies Categories 1 and 2 (GBC1 and GBC2). Mauritius has decided to be a 'respectable' IOFC and there is now a minimum tax rate of 15% in almost all areas. Some dilution of the foreign tax credit applied from 2003. However, Mauritius has tax treaties with more than 30 countries, and they can be combined with the offshore regime to give a good result, especially for trade and investment in India. Mauritius was one of six offshore jurisdictions which wrote 'commitment letters' to the OECD in May 2000 in order to avoid being included on the OECD's list of jurisdictions offering 'unfair' tax competition. Learn more in our full Mauritius Knowledgebase. |
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Offshore
Cyprus is an independent democratic republic, and a member of the Commonwealth. It is prosperous: GDP US$23,000 per head. The economy is dominated by services, with tourism particularly important. Unemployment is low. The Cyprus Government worked hard to create a favourable offshore tax regime while at the same time maintaining a normal-looking domestic economy, albeit with rates of taxation that are low by international standards. The success of this programme is attested by the nearly 50,000 offshore companies registered in Cyprus since 1975. However, the island's entry to the EU in 2004 meant a restructuring of the tax regime, which took place on 1st January 2003. Domestic and offshore companies alike now pay 10% tax. Cyprus has double-tax treaties with 33 other countries, including most major Western 'high-tax' countries, and most Central and Eastern European states. This is unusual for an international offshore financial centre and the effect is that Cyprus is a very effective location for holding and investment companies aimed at emerging markets. Cyprus has a good, European-standard business infrastructure, and English is widely spoken. However, it is a relatively expensive jurisdiction for offshore operations, and many documents need to be filed in Greek. The legal system is predominantly based on English law, and provides for various types of trust. The division of the island into Greek Cypriot and Turkish Cypriot zones separated by a UN buffer zone following the Turkish invasion of 1974 does not seem to impede normal commercial or offshore operations, which take place in the Greek zone. In November, 2002, the United Nations presented a plan for a 2-state federation under a common government intended to resolve the problem before Cyprus's admission to the EU. Even after the Copenhagen summit in December which confirmed the island's admission to the EU in 2004, negotiations between north and south continued; but they broke down in early 2003 and the island signed its EU accession treaty in April. The European Commission and the US strenuously supported the United Nations' Annan Plan for reunification, but it was rejected by a Greek Cypriot referendum in April, 2004. Reunification, it if takes place, may form part of Turkey's negotiation to join the EU. The island's listing by the FATF in June, 2000, as one of 15 offshore jurisdictions said to have inadequate defences against money-laundering hastened a process of adjustment to international standards of banking supervision and information exchange. After the EU finally agreed its Tax Directive in June, 2003, Cyprus announced that it would implement the 'information sharing' provision of the Directive on entry to the Union in 2004. This means that information about savings returns received in Cyprus by nationals of other EU countries are now being passed to the tax authorities in the individuals' home countries. In late 2003 the government also announced plans to weaken previously tight banking confidentiality, although these were strongly resisted by the banks. Learn more in our full Cyprus Knowledgebase. |
