BTG June Newsletter

The takeover of Fintech!

A year ago, BTG addressed the revolution of Fintech and the promise Mauritius made to follow the trend and try produce the principal Fintech Hub for Africa. Today we show you the plans and resources that have been put in place to establish this dream. Mauritius has put together a project plan to ignite this development further. They plan to establish a sovereign fund to provide seed capital for the development of financial technology or Fintech activities on the island. On top of this, incentives are being discussed within the Economic Development Board to attract Fintech business operations into the country. Some of the latest technologies that are being promoted will prevent hacking and other kinds of frauds, while regulating blockchain-related activities.
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The FSC said ‘The discussions of the committee were centred on positioning Mauritius as a regional hub of sound repute in the field if Fintech norms by building an open and transparent regulatory regime which encourages innovation.’ The budget speech 2017-2018 shows Fintech as one of the key economic drivers as they are setting up a Regional Fintech Association that will collaborate and advise on the correct measures to make sure that the Fintech start-ups are running in the finest environment.

Mauritius have also put in place an adequate data protection law regime favourable for the Fintech start-ups in the country. This will allow the privacy and confidentiality problems that could halt the Fintech era to evaporate.
This is all over & above Mauritius having the right infrastructure and being perfectly located in the Indian Ocean at the cornerstone of Africa and Asia, with reliable connectivity in terms of transport, logistics, and high bandwidth internet! In conclusion we look forward to adapting our systems to the new Fintech movement and will be keeping a close eye on all updates!

Kenya Tax Alert

The Kenyan Income Tax Bill, 2018 was released for public comment and is now under review following public commentary. The Bill proposes to radically change the Kenyan Income Tax Act and makes important changes to the present regime. The key aim of the Bill is simplifying compliance and alignment with international tax best practice. 

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The Bill brings into line the OECD initiatives on Base Erosion and Profit Shifting (BEPS) with many of the BEPS measures being introduced into the domestic tax law. The most relevant proposals are related to ddouble tax relief and transfer pricing – both proposals involve international tax implications for in-bound and out-bound Kenyan investors.

Under the current Kenyan domestic law there is an “anti-treaty shopping” rule which places a restriction on utilising double tax relief. For example, in the Kenya-Mauritius tax treaty (although not effective yet) individuals residing in Mauritius and owning more than 50% of the underlying ownership of a Kenyan company can use the tax treaty once its effective to reduce double taxation. However, if the criteria are not met then there is no relief.

This section has now been enhanced in the Bill and allows double tax relief to only those entities that meet specific criteria namely:

  • fifty per cent or more of the underlying ownership of thecompany is held by an individual or individuals who are residents of that other contracting state for the purposes of the arrangement;
  • such underlying ownership obtained for a period of at least 183 days in that year; and
  • the personrelying on the treaty relief is engaged in the active conduct of business in the other contracting state, other than - (i) operating as a holding company; (ii) providing overall supervision or administration of a group of companies; (iii) providing group financing (including cash pooling); or making or managing investments.

The Bill also provides a mechanism for exchange of information relating to income tax or other taxes of a similar character which will allow the KRA to receive automatic or on request exchanges of tax information with other countries.

The Bill introduces a new Eighth Schedule on Taxation of Cross Border Transactions. The key aspects are:

  • Transactions between resident companies and non-resident companies (including unrelated entities) situated in preferential tax regimes (e.regimes that have tax rates of less than 16% or which do not have effective exchange of information arrangements or do not allow access to banking information or lack transparency) must be conducted on an arm’s length basis;
  • A requirementto keep updated transfer pricing documentation available for submission to the Kenya Revenue Authority (KRA) upon request. Failure to provide documentation will result in a penalty of 2% of the value of the transactions involved in addition to other taxes and penalties;
  • Country-by-country reporting by any ultimate parent entity which is part ofa multinational enterprise that has a subsidiary or permanent establishment in Kenya; and

The Bill also proposes several changes for rates of tax. A new higher rate of tax of 35% is proposed to be introduced for any individuals earning more than KES 9 million per annum (around USD89,000). The Capital Gains Tax rate is proposed to be increased from 5% to 20%. However, indexation is proposed to be introduced based on the Consumer Price Index (the CPIA) (as published by the Kenya National Bureau of Statistics) is proposed to be introduced. The indexation allows the cost of acquiring the asset and improving the asset to be adjusted for inflation.

Launch of E-Licensing Project in Mauritius.

The Launch of the E-licensing Project has got everyone talking! This great initiative has been developed to improve the business and investment climate of Mauritius. Mauritius has joined up with the European Union in order boost investment, steer economic growth, provide job creation and provide sustainable development. The EU have provided their support and services in this regard under the Economic Partnership Agreement.

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The Ambassador of the EU said, ‘The EU reiterates its strong commitment to support Mauritius in achieving the goas set for improved government transparency, improved regulatory framework, and improved accountability.’

The project will provide a transparent, streamlined access to licensing procedures. It will allow online submission, processing and approval of applications, as well as online payment fees and issue of e-permits.

This will create the opportunity for new technologies such as Artificial Intelligence and Big Data Analytics. This project will be launched over a period of 4 years and brings with it a lot of excitement to the industry.

Cross-Border Considerations for the Global Client

The South African Institute of Tax Professionals (Sait) are hosting an event with FNB in June 2018. The event is known as Cross-Border Considerations for the Global Client.The worldwide advisory and compliance web is closing-in. South African advisors must be capable to comply and manage the twists and turns of foreign rules and the impact of non-compliance. This workshop is going to ignite the international industry awareness but through a definite South African perspective, given the current tax, wealth, succession and compliance landscape. 
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The intensive tax planning and global compliance era has created a new professional playing field as the advisory sector is forever changing, digitalized and transparent which can create some unique challenges. The workshop will provide insight for all advisory institutions including lawyers, accountants, financial & tax advisers, banks and other service providers. If you would like to have a look at the schedule and attend the event, please click on the link below!

BTG Management Services (Mauritius) is a full service Management Company located in Mauritius licensed by the Financial Services Commission under section 77 of the Financial Services Act of 2007.

 

Contact Info

Head Office: MAIN OFFICE, Nautica Commercial Center, Royal Road Black River,  Mauritius

Phone: (+230) 483-1212

Fax: (+230) 483-1313

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