Through resilience, reforms, and a commitment to responsible growth, Mauritius has become a key player in facilitating global investments

By Shriram Subramanian

From a sugar-dependent economy at the time of independence in 1968 to one of Africa’s wealthiest nations today, Mauritius has undergone a remarkable transformation. It has also become a globally trusted International Financial Centre (IFC). This metamorphosis is a testament to Mauritius’ adaptability, strategic vision, and commitment to a robust financial ecosystem. Mauritius has diversified its economy, moving beyond sugarcane to other sectors like export-oriented manufacturing in textiles, tourism, financial and business services, information and communication technology, seafood procesing, real estate, and education. This has laid the groundwork for its emergence as a financial hub.

Several factors contributed to Mauritius’ rise as an IFC. Political stability provided a secure environment for investors, while its strategic location between Africa and Asia positioned Mauritius as an ideal gateway for investments into these regions. Mauritius strategically leveraged its geographical advantage by signing double taxation agreements with 46 countries. The India-Mauritius Double Taxation Avoidance Agreement (DTAA) played a particularly crucial role, making Mauritius a critical conduit for structuring investments into India. Between 2000 and 2024, it facilitated over $170 billion in foreign direct investment (FDI) into India, accounting for 34% of India’s total FDI. In FY24, Mauritius contributed $7.97 billion in FDI to India, reinforcing its role as a close and reliable partner.

Over 450 private equity funds are domiciled in Mauritius, facilitating nearly $40 billion in investments into Africa. Many Indian companies and outbound funds are using Mauritius as an investment hub and entry point for investments into Africa. The combination of geographic proximity, political stability, and a strong regulatory environment positioned Mauritius as the go-to destination for structuring investments into Africa.

Mauritius’ financial ecosystem offers tax efficiency, high-quality service, and a sophisticated regulatory framework. It has consistently adapted to global financial reporting standards, tax compliance, and governance requirements, making it a reliable destination for fund managers and development finance institutions (DFIs). Its strategic appeal is enhanced by a network of favourable tax treaties, particularly with India, which attracted significant investments until 2017 by offering exemptions on capital gains taxes. Despite global shifts in tax policies, Mauritius has remained a preferred jurisdiction for global investors, ensuring compliance with international standards through local service providers.

The journey of Mauritius to becoming a trusted financial centre was not without challenges. In February 2020, the country faced a significant setback when it was placed on the Financial Action Task Force (FATF) grey list due to strategic shortcomings in its Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework. This inclusion posed a serious threat to the country’s reputation as a trusted financial hub. The Mauritius government responded swiftly and decisively to the FATF grey listing. It embarked on an ambitious exercise to overhaul its AML/CFT framework, working closely with international organisations and receiving technical assistance from various global bodies. The country implemented comprehensive reforms to address the identified deficiencies, prioritising the implementation of the FATF action plan. By October 2021, Mauritius was removed from the grey list, well ahead of schedule. This rapid progress not only restored confidence in Mauritius’ financial system but also showcased the country’s ability to adapt quickly to meet international standards. Simultaneously, Mauritius took steps to align its tax policies with global norms. The 2016 revision of the India-Mauritius DTAA introduced capital gains taxation for investments made after April 2017. These changes have further enhanced its credibility on the global stage.

A significant boost to reputation came in 2024 with a landmark Delhi High Court ruling in favour of Tiger Global, a Mauritius-based entity. The case revolved around its sale of Flipkart shares, for which Tiger Global claimed tax exemption under the pre-2017 provisions of the India-Mauritius DTAA. Initially, India’s Authority for Advance Rulings denied Tiger Global tax benefits, arguing that the investment was structured through Mauritius solely for tax advantages with insufficient business substance. However, the high court overturned this decision, setting a powerful precedent for Mauritius-based investors. The ruling emphasised the validity of tax residency certificates issued by Mauritius authorities and reaffirmed the legal validity of the country’s tax structures. The court’s decision not only provided greater certainty for investors using Mauritius as an investment route but also reaffirmed the sanctity of the Indo-Mauritian tax agreements.

As Mauritius continues to evolve its financial ecosystem, it remains committed to global responsibilities and regulatory innovation. In November 2023, at the 28th Conference of the Parties, the government reiterated its pledge to reduce greenhouse gas emissions by 40% by 2030. On the regulatory front, Mauritius has enacted new legislation to regulate virtual assets and initial token offerings, aligning with FATF standards. The proactive approach resulted in Mauritius being rated “compliant” or “largely compliant” with all 40 FATF recommendations.

Through resilience, proactive reforms, and a commitment to responsible growth, Mauritius has not only transformed its own economy but has also become a key player in facilitating global investments. By staying adaptive, transparent, and committed to best practices, Mauritius has ensured its place as a trusted and preferred jurisdiction for fund managers, DFIs, global investors, and companies seeking opportunities in the world’s most dynamic markets.

The writer is founder and MD, InGovern Research Services, a corporate governance advisory firm.

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