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Mauritius Leaks exposes tiny tax haven's role in vast offshore system

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Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#31

Post by JumpCrisscross »

jddj wrote: post #28
JumpCrisscross wrote: post #19

Earlier quoted context omitted.

> It is a pain to India Do we have evidence of this? A lot of investment into India would not occur without a stable legal and tax environment on which to stage it. Traditionally, those have been Singapore and Mauritius.

Are we sure that it's the stability of Mauritius which is the sought after quality here? That seems a little euphemistic. Not that it's an unstable nation, all things considered, but I feel like it goes without saying that these companies and individuals are almost definitely solving for minimal tax rather than maximal "stability". From the article, quoted from a leaked email: This is primarily being done to ensure t…

> it goes without saying that these companies and individuals are almost definitely solving for minimal tax rather than maximal "stability"

Why does it go without saying? Indian courts can take 10+ years to resolve simple disputes; Mauritian courts are much faster.

A portfolio of stocks and bonds held in a Mauritian entity costs a few tens of U.S. dollars of extra accounting costs to do taxes on a year; a portfolio in India held by a foreigner can easily cost hundreds of dollars for an American investor to comply with.

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#32

Post by Scoundreller »

rolltiide wrote: post #22
Scoundreller wrote: post #6

A Mauritian passport is a useful one too: no visa required to go to EU, most of Southern Africa, Russia or China. eVisa like most others for India.

Do they sell that too? Asking for myself

Dunno. Just was surprised to read about it once and figured it would pair nicely with a US or Canadian passport.

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#33

Post by davidwitt415 »

piker wrote: post #25

A lot of the content here seems to be justifying breaching a law firm's security and disclosing sensitive attorney-client privileged information. Unlike some of the prior disclosures, there doesn't seem to be any allegation that the tax haven was being used for money laundering purposes (cf. Panama Papers), but just that the country itself was somehow acting unfairly to less developed jurisdictions. In addition to so…

It's money laundering of a different sort; the meaningful business activities are not taking place in Mauritius, it is just a post office box and some legal forms, so it is a tax dodge to claim the business is conducted in Mauritius (or any of the so-called tax havens). Taxes should be paid where a business does its real business activities.

Tax avoidance is a huge business, and legions of lawyers and accountants have been employed for generations to find or create these loopholes. While they may be considered legal in narrow terms, they most often skirt the intent of the law.

As the legality of these arrangements is often questionable, it is also right to look at them morally. After all, laws are supposed to be equitable, and a system may be 'legal' while also being wrong, either morally or equitably.

Therefore, while Bob Geldolf's investments by be technically legal, it is still in the public's interest to know about these secretive arrangements, especially since 'Sir' Bob made his public acclaim over his supposed charitable interest in Africa, which is now revealed to be financial above all else.

It's not gossip if it is in the public's material interest.

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#34

Post by jddj »

JumpCrisscross wrote: post #31
jddj wrote: post #28

Earlier quoted context omitted.

Are we sure that it's the stability of Mauritius which is the sought after quality here? That seems a little euphemistic. Not that it's an unstable nation, all things considered, but I feel like it goes without saying that these companies and individuals are almost definitely solving for minimal tax rather than maximal "stability". From the article, quoted from a leaked email: This is primarily being done to ensure t…

> it goes without saying that these companies and individuals are almost definitely solving for minimal tax rather than maximal "stability" Why does it go without saying? Indian courts can take 10+ years to resolve simple disputes; Mauritian courts are much faster. A portfolio of stocks and bonds held in a Mauritian entity costs a few tens of U.S. dollars of extra accounting costs to do taxes on a year; a portfolio i…

> Why does it go without saying?

Mainly because their motivations for doing so (namely: tax avoidance) were spelled out by the companies and their accountants in a series of email leaks. That's the thread we're in right now.

Australia and Canada have DTAs with India too. Pretty stable countries by most people's reckoning, potentially moreso than Mauritius and both with solid legal systems. Yet we aren't seeing PwC recommend to Silicon Valley investment firms that they spin up Australian shell companies to facilitate Indian investment.

We could probably speculate as to why not, or we could look at what the companies and their accountants said in the aforementioned series of leaked emails.

It's tax avoidance. It's not illegal, but it's not simplification or stability.

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#35

Post by SmileyRedBall »

JumpCrisscross wrote: post #31
jddj wrote: post #28

Earlier quoted context omitted.

Are we sure that it's the stability of Mauritius which is the sought after quality here? That seems a little euphemistic. Not that it's an unstable nation, all things considered, but I feel like it goes without saying that these companies and individuals are almost definitely solving for minimal tax rather than maximal "stability". From the article, quoted from a leaked email: This is primarily being done to ensure t…

> it goes without saying that these companies and individuals are almost definitely solving for minimal tax rather than maximal "stability" Why does it go without saying? Indian courts can take 10+ years to resolve simple disputes; Mauritian courts are much faster. A portfolio of stocks and bonds held in a Mauritian entity costs a few tens of U.S. dollars of extra accounting costs to do taxes on a year; a portfolio i…

@JumpCrisscross: "A portfolio of stocks and bonds held in a Mauritian entity costs a few tens of U.S. dollars of extra accounting costs to do taxes on a year; a portfolio in India held by a foreigner can easily cost hundreds of dollars for an American investor to comply with."

Yea, it's got nothing to do with extracting the maximum amount of revenue out of the host country whilst managing to avoid giving anything back in taxation :]

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#36

Post by JumpCrisscross »

SmileyRedBall wrote: post #35
JumpCrisscross wrote: post #31

Earlier quoted context omitted.

> it goes without saying that these companies and individuals are almost definitely solving for minimal tax rather than maximal "stability" Why does it go without saying? Indian courts can take 10+ years to resolve simple disputes; Mauritian courts are much faster. A portfolio of stocks and bonds held in a Mauritian entity costs a few tens of U.S. dollars of extra accounting costs to do taxes on a year; a portfolio i…

@JumpCrisscross: "A portfolio of stocks and bonds held in a Mauritian entity costs a few tens of U.S. dollars of extra accounting costs to do taxes on a year; a portfolio in India held by a foreigner can easily cost hundreds of dollars for an American investor to comply with." Yea, it's got nothing to do with extracting the maximum amount of revenue out of the host country whilst managing to avoid giving anything bac…

> whilst managing to avoid giving anything back in taxation

I’m comparing accounting costs. Both paid to the same offshore accountant. Indian tax codes are complicated and unpredictable. Mauritian ones are not. As an outsider, simplicity wins. (I’d gladly pay a higher foreign tax rate if it meant simpler paperwork.)

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#37

Post by kirubakaran »

rolltiide wrote: post #22
Scoundreller wrote: post #6

A Mauritian passport is a useful one too: no visa required to go to EU, most of Southern Africa, Russia or China. eVisa like most others for India.

Do they sell that too? Asking for myself

I searched around a bit out of curiosity and it looks like it is USD500k investment to get permanent residence and 2 years of residence to apply for citizenship.

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#38

Post by mycall »

> In Uganda, more than 40% of the population lives on less than $2 a day.

I could retire now!

In my alternative universe, all system administrators unite and take back all the stolen money from the poor. They are effectively the only people who can do this.

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#39

Post by haltingproblem »

Former HF portfolio manager. I actually set up a Mauritius entity to invest into India about a decade ago for a large multi-strategy HF.

The suggestion that Mauritius is a stable and well-understood platform for investing into India has the causality completely backwards. Mauritius is stable and prosperous because of the investments that are siphoned through it and the local economy it creates! Compare Mauritius to Maldives for an abject lesson on the effects of the offshore economy on an Island nation.

The fact that the funds are invested in India through Mauritius does not exempt them from Indian laws! The only thing it does is that disputes among the passthru firm's shareholders are resolved in Mauritius court. Similar to using Delaware in the US, it does not exempt the company from US taxes or laws but just makes intra-company disputes the domain of Delaware Chancellery court where laws are well-nderstood.

The only reason for any institution to use Mauritius as a conduit is to avoid taxes under the DTAA and to anonymize the source of funds to Indian authorities. Any large institution will find domiciles to minimize their tax burden. They engage law firms and accountants who bill hundreds of dollars an hour to do this. Every single institutional investor across the spectrum from hedge funds, private equity, venture capital funds to corporations does this. Any other suggestion to the contrary is just fantastic. [edits for clarity]

Re: Mauritius Leaks exposes tiny tax haven's role in vast offshore system

#40

Post by coldtea »

JumpCrisscross wrote: post #21
coldtea wrote: post #20

Earlier quoted context omitted.

> By that reasoning, every double taxation treaty that contains some sort of exemption is exploitative. If they are treaties with tax havens, places used purposefully for those reasons, then yes, they are.

> If they are treaties with tax havens, places used purposefully for those reasons "Tax haven" is an ambiguous term. Double taxation treaties exist so investments aren't taxed twice, once at the origin and again at the destination. The Indian-Mauritian treaty mostly covers capital gains, and in that way is similar to most such treaties. The principal benefit of jurisdictions like Mauritius, the Cayman Islands, Delawa…

>The principal benefit of jurisdictions like Mauritius, the Cayman Islands, Delaware or Singapore is less to reduce taxes than to simplify them.

Well, I seriously doubt that. Especially when extremely elaborate schemes are used to route taxes to those destinations and "simplify" them...

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