Alphabet soup of regulation
A BLIZZARD OF LETTERS is battering the offshore financial sector across the globe. One of the more existential threats comes from two Organisation for Economic Cooperation and Development directives: on BEPS – Base Erosion Profit Shifting – and the other CRS – the Common Reporting Standard. These force offshore hubs like Mauritius to prove that they are an economic jurisdiction of substance, rather than just acting as a place to help companies avoid tax. India is getting serious about tax, too. The double tax avoidance agreement has been revised, changing the economics for India-focused funds that channelled money through Mauritius to avoid paying tax twice – because, for some unscrupulous individuals, it was used to avoid paying tax even once. India is also bringing in its GAAR – General Anti-avoidance Rules – which will further tighten up the system. Meanwhile, the US has passed the FATCA or Foreign Account Tax Compliance Act, making it harder for Us-based funds to avoid the taxman. Mauritius is responding with its own alphabet soup: a slew of licences to attract a new generation of more sophisticated offshore service providers. They include the GLAS, or Global Legal Advisory Services licence, and the fintechoriented RSL or Regulatory Sandbox License.