ISLAMABAD: High Commissioner of Mauritius to Pakistan Yusuf Elahee has said that Pakistan has a huge potential for foreign direct investment, however, lack of information about the available profitable Pakistani market has resulted in the lesser tune of FDI. International investors are required to be pursued vigorously to convince them to benefit from Pakistani market by making investment in different sectors.
During an exclusive interview with Customs Today, Yusuf Elahee said that tax rates on FDI in Pakistan were quite rational, but main problem was the in explicit information available to the foreign investors. Therefore, it was the need of the hour to make the available tax related data and information quite easy to understand for the international investors along with provision of information in languages other than English and Urdu.
Giving a comparison between tax system of Pakistan and Mauritius, he said that both the countries signed a Double Taxation Agreement (DTA) in September 1994, and an Investment Promotion and Protection Agreement (IPPA) in April 1997 and a Bilateral Air Services Agreement was signed between Mauritius and Pakistan in November 1979 and MoU signed in 1999.
Moreover, he said that bilateral business relations between Pakistan and Mauritius were based on shared culture, tradition, language and religion. However, during the past few years there had been a boost in our relations especially on the trade front.
Corporate income tax in Mauritius, he said that his government applied a basic corporate income tax rate of 15%. All income accruing in or derived from Mauritius by a resident company is chargeable to corporation tax.
However, non-residents are subject to tax on income accruing in or derived from Mauritius. Income tax is charged on the taxable income of resident companies which accrues in or is derived from Mauritius and elsewhere” he added saying, income tax is also charged on the taxable income of non-residents accruing in or derived from Mauritius.
Similarly, he said that the withholding tax, dividends and interest payments were not subject to any withholding tax in Mauritius. Royalty payments and other payments are subject to Mauritian withholding tax.
He said that his country, Mauritius was a gateway to African countries and offered huge opportunities to Pakistani businessmen desirous of winning those markets. Furthermore, Mauritius has huge scope for Pakistani products, especially, textiles, cosmetics, cotton, cereals, pharmaceutical and plastic, and these marvelous opportunities must be tapped.
The High Commissioner was of the view that current bilateral trade volume between the two countries was more or less around $56 million which was very low and it was need of the hour to strengthen bilateral trade relations. Both Pakistan and Mauritius signed a Preferential Trade Agreement (PTA) that became operational in November 30, 2007 but no efforts were made to enhance the bilateral trade relations. It is need of the hour to activate PTA and Mauritius is mulling to sign Free Trade Agreement with Pakistan.
He said that Pakistan offered concessions to Mauritius on 130 items, whereas Mauritius gives concession on 102 items. The objective of the PTA was to pave the way for FTA. The issue of Free Trade Agreement (FTA) was yet to be resolved to help make progress for the sake of trade development. The frequent exchange of international exhibitions/delegations between both the countries would be a best source of strengthening the relation.
He said that business communities of both sides must interact with each other to boost trade volume between two countries. Mauritius, with its strong textile sector, has been well poised to take advantage of the Africa Growth and Opportunity Act (AGOA). We would like to share the knowledge and expertise with Pakistani business community. Communication connectivity is the main hurdle in boosting the trade between the two countries as there is no direct air connectivity between the two countries and the flights are running through Dubai.
To a question about possible incentives for Pakistani traders and investors offered by his government, the High Commissioner said that the Foreign Exchange Control Act was suspended in 1994 in order to enable the free repatriation of capita and the Mauritius Investment Promotion and Protection Agreements also provide for the free repatriation of capital.
He said that Mauritius had the necessary framework to protect the interests of foreign investor. Mauritius is a member of the International Court of Justice, the International Centre for the Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency.
“My country offers an attractive corporate income tax rate of only 15% (which can be lowered to only 3%), Mauritius does not levy capital gains tax and does not levy withholding tax on dividends and interest payments. Mauritius does not apply stringent minimum capital requirements to set up a company and Mauritius offers an extensive tax treaty network with several countries” he added.
To another question, he said that Mauritius government strongly reaffirmed commitment to support investors and operators in their pursuit of business opportunities in the SEZs and elsewhere on the African continent through the business facilitation and market intelligence services offered by the Mauritius Africa Fund and the Board of Investment.
“Mauritius views business opportunities in Africa as a potent way of expanding the economic space and widening the business footprint of Mauritian operators to achieve sustained economic growth” he maintained.
In this regard, he said that the Africa Strategy of the government entailed the creation of a framework to enhance business with African partners. Elements of this framework include B2B collaboration through bilateral agreements, institutional cooperation, business interaction and matchmaking, investment and export facilitation, and market intelligence.
