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Mauritius says it is not a 'post-box' economy

PORT LOUIS: Facing allegations of being home to 'post box addresses' for round-tripping of funds by Indian entities, Mauritius says it has put in place strongest possible regulatory checks against any illicit flow of funds.

The government officials, as also top executives at leading MNCs and local firms operating financial services and advisory businesses here say that Mauritius is victim of a wrong perception and the regulations in the country are strong enough to thwart any round-tripping efforts.

Mauritius has often been criticised in India as a country with 'post box addresses' for entities making investments into the Indian markets, as numerous investment companies, including private equity funds, have been found to have similar addresses in this Indian Ocean island nation.

Mauritius, however, says that this 'wrong perception' has got created because of limited knowledge about a strong regulatory regime that allows 'management companies' to lend their address to their clients -- a practice that enables an effective surveillance for any possible wrongdoings.

The regulations also insist that the entities, setting up shop in Mauritius for investments in India and other countries, must have a substantial presence here in terms of infrastructure, employees and business, a top official said.

The industry executives also agree that norms are very strict in Mauritius for management companies, who are held liable for any wrongdoings by their clients, while they are also required to have representatives on the client boards to ensure an effective compliance to the local regulations.

"It is unfortunate that there is a wrong perception about Mauritius in India with regard to it being a tax haven or a post-box economy," global banking giant Standard Chartered's Mauritius CEO Sridhar Nagarajan said.

"But, as a major international bank operating here, we can tell you that the regulations are very strict here and even opening a bank account is very difficult when compared to many other jurisdictions in the world," he said.

"There is a very good mechanism in place to check the round tripping and it cannot be possible that such a huge amount of FDI that has been routed to India through Mauritius has all been round tripping," he said, while adding that investors chose Mauritius route because of genuine benefits in terms of tax, location and ease of doing business here.

Global advisory giant PwC's Anthony Leung Shing also said that Mauritius had long ago stopped the traditional way of doing business through a "so-called letter-box address type model" and the focus has now shifted to the companies setting up huge offices and hiring large number of employees here.

"So what is happening is that we have moved up the value chain from being a place for mostly holding companies to provider of various services, which include functions like treasury functions, procurement, administration, accounting, payroll etc," Shing said.

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