Mauritian conglomerate Ireland Blyth Ltd (IBL) noted that uncertainty over the tax avoidance treaty with India has cut into its business, by reducing investments earlier routed through the island economy, as a preferred financial centre, into India.

“Over the last two years we have lost a lot of business from India,” Chief Executive of IBL, Nicolas Maigrot told the Reuters Africa Summit. He observed that newcomers joining the market are not from India anymore, but rather from other countries like Africa and Europe.

Moreover, the general anti-avoidance rules (GAAR) aimed at companies and investors routing money through alleged tax havens such as Mauritius, scheduled to be implemented from April 2014, had been delayed for two years.

While the decision to delay the rules got a positive market reaction in India, with investors betting this would likely help attract more capital inflows, the delay in clarifying how the new rules would affect Mauritius had led some potential investors to bypass Mauritius for other destinations.

“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,” Nicolas Maigrot went on to tell Reuters.

Mauritius needs to specify how the island will be affected by new Indian tax measures due to take effect in April 2016, added the CEO.

Accordingly, data recently released by the Indian Department of Industrial Policy and Promotion (DIPP) showed that a major decline was registered in Mauritius-routed foreign direct investment (FDI) to India till date in the current financial year.

India-bound FDI equity inflows routed through Mauritius from April 2013 to January 2014 were a mere USD 4,113 million compared to the corresponding period a year ago (April 2012 to January 2013) when they totalled USD 8,175 million.

The reason behind this drastic decline is that investors are increasingly using Singapore as a channel to route funds into India in stark preference to Mauritius.

Meanwhile, IBL, which has made it to the list of top 10 companies in the Indian Ocean region at fourth place, as per a recent ranking by business magazine L’Eco Austral, saw 21% growth in operating profits for the year ended June 30 to hit Rs 1.23 billion.

This compares favourably to the Rs 1.02 billion in profits achieved a year ago when the seafood and marine sector contributed the bulk of company profits.

The group also succeeded in shoring up revenues, going up 15% to Rs 19.91 billion for the financial year ended 30 June 13, compared to Rs 17.33 billion last year.

However, the CEO noted that retail sector had become more competitivewith the entry of other companies to the sector putting a lot of pressure on IBL’s margins.

He concluded that IBL’s strategy is to go beyond boundaries and develop activities that are stable in the long term, with presence in emerging African economieslike Gabon and Uganda.

Image (IBL group): Mauritius needs to specify how the island will be affected by new Indian tax measures due to take effect in April 2016, said CEO Nicolas Maigrot (left).

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