The History Of Mauritius

Published Date: 02 Nov 2017

INTRODUCTION

Doing business is a quantitative measure of regulation in starting up a business, dealing in construction permits, employing workers, registering property, getting credit, protecting workers, paying taxes, trading across borders, enforcing contracts and closing business. These apply to all form of business carried out in the world.

Business runs with 2 things:

Time and motion that measures the efficient achievement of regulatory goals.

Law and regulation that ensures the efficient running of the business and clarify property rights and reduce the cost of resolving disputes.

Before starting a business it is very important the total cost of setting up the business. Cost determines investment decision whereas location determines sustainability. However failure to make precise cost calculation can affect investment opportunities.

The cost of Doing Business in a country implies the ease of doing business in a country, that is, the ease and the available facility for entrepreneurs to set up businesses. Many government policies are geared towards encouraging growing businesses in their country to benefit from export and to make their country a reliable business centre.

DOING BUSINESS IN MAURITIUS

History of Mauritius

In the 1970’s, Mauritius move from the sugar-baron capitalism to divert from one industry to another starting with textile in the 1970’s to the long haul tourism from the 1980’s.

In the early 1970’s, the industrial era began. The establishment of Export Processing Zone (EPZ) has led to rapid expansion of industrial development. Due to the double taxation agreement with more than 46 countries, investors were able to make tax benefit or duty free imports of raw material and machinery and the owners of the EPZ enterprise agreed to export all their products towards the European countries. The textile industry has been able to cut cost and outsource more work as it was a low cost country. At start there were only 9 EPZ firms employing 644 persons. In 1991, the government urged diversification of the EPZ industry to give priorities to other industries such as electronics among others. In 1992 there were 568 EPZ enterprises producing items such as flowers, furniture, leather goods and jewelry.

Starting up a business in Mauritius

The cost to register a business in Mauritius is represented as % of Gross National Income (GNI). Over the last 7 years, the cost of starting up a business has fallen down drastically to encourage investment. Mauritius has one of the highest GDP per capita in Africa. It was at its lowest in 2003 by 10.5 as a % of gross national investment per capita to its lowest in 2010 at 3.80 as shown below:

The steps while registering business:

Incorporation and register the business and search for company name

Entrepreneurs can form their enterprise online. An annual subscription fee of Rs 2000 is payable to the Registrar of Companies. Commercial registry is necessary whereby the tax and local authorizes will be automatically informed and a Certificate of Incorporation will be provided.

Receive inspection by local authorities

Once the business has been registered, agencies from relevant ministers and local authorities, will communicate relevant guidelines for the business to trade within the jurisdiction.

Pay license fee

The company needs to pay a license fee of Rs 6000 to local authorities for satisfying guidelines and is payable until 15 January of each financial year. If not the case, a penalty fee will be imposed.

Register with the social security office

All employees must be registered under the social security.

Doing business in Mauritius

Multinationals, hedge funds and other foreign investors are using Mauritius as a low tax financially sophisticated platform for doing business in stickier times. Mauritius is attractive to foreign investors as it is a secure place. GDP rise on average of 4 % each year. In times of rapid economic changes, Mauritius has been able to create long term value that can be challenging for investors.

Despite its reliance on trade and investment with Europe, the island has been able to get out of the financial crisis. Rama Sithanen, a former prime minister, pointed out that "On the economic front it will be tough" to an economy growth due to higher level of unemployment. Rundheersing Bheenick, the governor of Bank of Mauritius, says "We must improve productivity and competitiveness to attract new investment."

The end of the EU agreement forces a change in direction of the sugar industry. Nowadays, Mauritius has developed an international financial service industry with low tax offshore sector that links investors worldwide to Sub-Saharan Africa and has become the main channel for investment in India from 2010 to 2011.

To encourage investment, Mauritius provides Global Business Company type (GBC1 & 2). A GBC 1 is one qualified as a tax "resident" in Mauritius and thus benefit from the Double Taxation Agreement Network. This offers significant opportunities for international tax planning. A GBC 2 is better suited for holding and managing private assets as it provides better confidentiality by structuring the shareholding. The GBC 2 is non-resident for tax purposes and therefore is a tax exempt entity and cannot avail itself of the relief under the DTAs in force in Mauritius.

A dedicated team of professionals at Board of Investment (BOI) with strong industry expertise can provide professional guidance for successful business launches in Mauritius. A strong partnership has developed between BOI and the private sector, thereby improving investment climate and improving innovations.

Why investors prefer Mauritius for doing business?

Economic, financial and economic stability

Strategic location for doing business and has a favorable time zone

Government incentives

Tax free dividends

Up to 100% foreign ownership

Exemption from customs duty on equipments

Free repatriation of profit, dividend and capital

No minimum foreign capital required

Reliable hybrid legal system which is derived both from the English and French law

Good infrastructural support ( airport and port facilities, electricity, water supply and road networks)

Well educated, bilingual and skilled workforce

Unique opportunity to combine both business and pleasure being a paradise island

Where can you invest?

Investors want to minimize risk with the expectation of higher return during an acceptable time framework. A lot of investment sectors have been developed, upon which investors can base them in deciding where to invest. Such investment vehicles include:

Business process outsourcing

Firm from Britain and France have came to Mauritius to take activities such as call centers, back office accounting and administration and software development. Such firm has been able to withstand financial crisis and has shown rapid growth in the recent years.

Financial services

Mauritius provide the best business friendly well regulated centre, low tax jurisdiction, financial instrument for tax efficient investment and a pool of experienced professional which allows investment to take place in areas such as administration, banking, wealth management and trust services, among others. Moreover, the financial services are backed by an efficient and reliable regulator the Financial Services Commission.

Health care

Being a world class holiday destination, Mauritius is positioning itself as a hub for medical tourism by attracting visitors for medical treatment.

Project based on renewable energy

With the project, "Maurice-ile durable" government gave Rs 1 billion to use sea water, solar energy, wind and create projects to reduce dependency on fossil fuel.However instead of investing in new business, investors can place their money in riskless instruments such as Treasury bill, bonds and commercial papers or buying equity over the Stock Exchange of Mauritius.

Ease of doing Business

Since independence, Mauritius has strived hard to reach higher level of standard of living. It is a proven jurisdiction that today, Mauritius is well known around the world and the best country on basis of business performance among the African countries.

Over the past years, businesses have been able to create and combine a coherent industry with the aim of promoting and preserving Mauritius status a credible international financial services jurisdiction, technical communities are exploring the potential of developing Mauritius to a Regional Treasury centre and how to seize the opportunities offered by the African hinterland.

Mauritius is the strongest performer and has the highest doing business indicators in the African countries. It has a political and financial stability which has helped to welcome foreign investors over the last decades. To encourage investment, the government of Mauritius has provided banking, communication, financial and professional infrastructure to meet to meet the requirements for performing international business and tax practitioners.

Mauritius, located between Asia and Africa, has a Strategic Global Business centre in the Indian Ocean and is destined to become a financial hub of the African region. The Global Business Legislation enables corporate and commercial clients to access the benefits of its Double Taxation Agreement (DTA with 36 countries) for investment purposes and attracting private clients to manage their finances.

In 2010, Global Institutional Investors Forum (GIIF), a member of not for profit organization organized a debate to promote and represent the views and interest of global investors using Mauritius as an investment jurisdiction.

Mauritius has a modern business environment which is administered through the Business Facilitation Act which provides clear guidelines and allows any business to start operations on the basis of self adherence to comprehension. It tends to globalization that is trade liberalization by the removal of trade barriers which helps to bring foreign direct investment (FDI) as well as attracting foreign talents, known-how and technology.

DOING BUSINESS IN MADAGASCAR

History of Madagascar

Madagascar is an island with an area of 587, 041 square km, located in the Indian Ocean off the eastern coast of Africa. It is the fourth largest island in the world and forms part of the African countries. Madagascar’s population is predominantly a mixed of Asian and African origins. Madagascar became a French colony in 1896 but regained independence in 1960. The country is endowed with many natural resources such as graphite, chromites, coal, bauxite, rare earth elements, salt, quartz, tar sands, semiprecious stones, mica, fish, and hydropower that can help its own growth.

Madagascar has a unique culture, art and social behaviour. Different tribes with their own culture and customs make the country a beautiful rainbow of culture and should be displayed to the world. The country has always given prime priority for its customs and social behaviour. The population of Madagascar is proud to have their own festivals and social activities.

Madagascar has a slow and steady growth path from an extremely low level. Agriculture, including fishing and forestry, is a mainstay of the economy which accounts for more than one quarter of GDP and employing 80% of the population. Exports flourish in recent years primarily due to duty-free access to the US. However, Madagascar's failure to comply with the requirements of the African Growth and Opportunity Act (AGOA) led to the termination of the country's duty-free access in January 2010 and a sharp fall in textile production. Deforestation and erosion, aggravated by the use of firewood as the primary source of fuel, are serious concerns. The current political crisis, which began in early 2009, has dealt additional blows to the economy. The political crisis has weakened Madagascar from using the rules set by the World Bank and the IMF. Owing to the crisis, Tourism fell and many investors are wary of entering the uncertain investment environment.

In 1992, the national assembly elections voted for the termination of 17 years of single party ruling. In 1997, Didier RATSIRAKA was the ruling party. In April 2002, the high constitutional court announced Marc RAVALOMANANA as the winner of the presidential elections. Oppression and censorship of the press brought down RAVALOMANANA presidency and later on Andry RAJOELINA took over RAVALOMANANA.

Business Etiquette in Madagascar

Business Attire: It is acceptable for professionals to wear business casual clothing. It is not compulsory for men to wear suits. Women can wear skirts and blouses to the office, but the skirt should not be above the knee and sleeveless blouses should be avoided and modest accessories are acceptable.

Business Cards and Professional Titles: Malagasy professionals do not give importance to business cards and it should not be in red. When addressing a Malagasy businessperson, it is most appropriate to use titles like Madame in place, Monsieur, unless invited to do otherwise.

Punctuality: International professionals should always be on time for meetings in Madagascar. However, businesspeople from other countries can be kept waiting a few additional minutes for all Malagasy professionals to arrive. Handshakes are the most common greeting.

Negotiating and Bargaining: If vendors at the market or other professionals can tell that a businessperson is not from Madagascar, the vendor might raise the price of an item for a foreigner unless there is an attempt to speak the native language. Even in business deals, it is customary to act with disapproval when the first price is offered so that the bargaining can begin.

Giving Gifts: In Madagascar, professionals do not exchange gifts. However, if a foreign professional is staying with a host family, it is a nice gesture to present the family with a small gift. Souvenirs from the professional's home country, as well as candy, are allowed.

Starting up Business in Madagascar

Similar to Mauritius, Madagascar too the cost to register a business is represented as a % of GNI per capita. Over the past 8 years, the cost of doing business reached its peak value of 59.00 in 2003 and from there on, it kept declining till 2009 to reach its lowest value of 6.20. After 2009, the cost of doing business followed an upward trend.

The procedures to be undertaken while registering for a business in Madagascar are as follows:

Fiscal Identification Number

In Madagascar, prior to registration of a company, the entrepreneur has to apply for a new tax identification number through online registration and has to provide more documents. The time taken to obtain the tax identification number is 1 day and no fee is charged.

Application for a license

The commercial registration umber and the professional card are obtained in approximately 2 days. Since 2007, the one stop shop send s the company the certificate of deposit of statutes.

Registration to the Economic Development Board of Madagascar

The company has to file forms for each employee with National social security fund. The required forms are:

The registration form

Application for workers affiliation

Health Insurance

A copy of each employee’s passport, birth certificates and a copy of identity cards should be filed along with the required forma and the corporate registration certificate. It takes on average 4 to 8 days to get registered with the EDBM.

Publish notice of constitution

FEE SCHEDULE

Registration for tax

No fee

Commercial Registration

MGA 2,000

K.Bis

MGA 2,000

Institut National de la Statistique Malgache

MGA 20,000

Fee to publish a notice of constitution

Between MGA 10,000 to MGA 20,000

Registration fee

0.5% of share capital

Advance on Income Tax

MGA 320,000

Then it takes about 2 days to publish the notice of constitution.

(Note: MGA 1= MUR 0.01)

Doing business in Madagascar

Till today, like Mauritius, Madagascar too has tried to acquire the required expertise and knowledge to develop its country without affecting its culture. Madagascar, being a country with abundance of natural resources, it has many investment opportunities.

Tourism sector: The tourism sector is considered as one of the most dynamic sector in Madagascar. There is a strong potential for growth in the tourism sector and has shown a 21% increase in foreign arrivals between 2004 and 2005. Madagascar offers attractions that have the potential to appeal to both the residents and tourists alike. The popular attractions for the tourist in Madagascar are: golf, fishing, a unique natural ecosystem, and miles of beaches. Opportunities for investment exists in building up of hotels since there are few that are  and few flagship resort hotels or ecotourism hotels on the island.

Transportation: From the year 2002, the government has committed itself in maintaining the existing network and building up new roads. The transportation and Infrastructure sector is one of interest. To improve infrastructure for more tourists in Madagascar, the government is in the construction of new roads. Nowadays, Madagascar accounts for approximately 55 airports in which 2 are accessible to jumbo jets and around 17 ports for both national and international navigation.

Mining sector: Madagascar is considered to hold 50%of the world’s sapphires, as well as other semiprecious gems and has also deposits of iron, nickel, graphite, bauxite and uranium. The country has deposits of lesser-known minerals such as vanadium, a metal used in high-strength steels and titanium alloys, and ilmenite, used in pigments and whiteners from toothpaste to paint. Foreign mining companies are flocking to Madagascar. Two of the biggest investments are in nickel and ilmenite.

Food & Beveraging Processing Sector: The food and beverage processing sector refers to the manufacturing, processing and preservation of meat, fish, fruit, vegetables, oils and fats; manufacture of dairy products, manufacture of grain mill products, starches and starch products and prepared animals feeds, manufacture of other food products (e.g. bread, sugar, chocolate, spices) and the manufacture of bottled and canned soft drinks, fruit juices, beer, wines, etc.

The firms in Madagascar presently have lesser imports as compared to those in other parts of the sub-Saharan country. Even packaging materials are generally locally sourced. Many firms are positive about the potential for growth in the agribusiness sector of the country. Being the 4th largest island in the world, Madagascar has a potentially large access to available seafood. Many investment opportunities hence exist in Madagascar’s high quality and globally renowned shrimp industry and seaweed industry. Incentives from industrial free zones (EPZ) create a number of benefits for investors and many have already shifted production from Asian locations.

Cost of doing business

Madagascar has an agricultural based economy and the country is a popular tourist attraction. Owing to the government's efforts to make the country financially appealing, professionals in Madagascar are doing more business with individuals from other countries. Being aware of proper etiquette while in Madagascar will help professionals make a favorable impression.

In 2010, Madagascar was ranked 134 in the ease of doing business rank out of 183 countries. The ranking indicates the fact of long procedures and high cost involved before setting up a business. In 2011, Madagascar was 144 out of 183 countries. There was deterioration in the ranking of Madagascar. This was due to a ‘Crackdown’ in 2011 in the country. Fight for better reforms in the country began- a battle for democracy. It was seen that economic development, institutional reform and respect for fundamental rights do not necessarily go hand in hand. Press freedom, no censorship and no oppression and injustice was the headlines of great concerns in the country. There is still room for improvement in managing the Malagasy economy and in exploiting its natural resources.

The Benchmark

Singapore is an island country made up of 63 islands separated from Malaysia. It is known as one of the four Asian tigers. Singapore is the world's fourth leading financial centre, and its port is one of the five busiest ports in the world. The economy depends heavily on exports and refining imported goods, especially in manufacturing. In terms of purchasing power parity, Singapore has the third highest per capita income in the world. Singapore is one among the top three trading and business destination. It is the first economy which has been mostly open to international trade and investment. The country is enriched in a globally competitive work force and has an excellent infrastructure and telecommunication networks.

Singapore is an advanced, successful free-market economy, featuring an open and corruption-free environment. Globally connected, a pro-business environment with a strong and stable infrastructure to boost and sustain growth and success in a myriad of industries. Main business activities in Singapore are electronic, chemicals biomedical, transport engineering; construction, wholesale & retail trade, storage, hotels & restaurants, information & communications services, financial services, petroleum refining, ship repair, entrepot trade and business services. The Accounting and Corporate Regulatory Authority (ACRA) is the regulatory body of business entities and public accountants in Singapore. Its main aim is to provide a responsive and trusted regulatory environment and acts as a facilitator for the development of business entities and the public accountancy profession.

Furthermore, Singapore is rank among the 10 top in Asia to have motivated workforce and has a conductive labour regulation for most business. The government established a number of incentives programmes to help companies improve efficiency, strengthen capabilities and explore new opportunities in their business. It has also engaged agencies like the Economic Development Board (EDB), SPRING Singapore, International Enterprise Singapore (IE Singapore) and Workforce Development Agency. Singapore is opted as the benchmarking Country as in the Doing Business Report published by the World Bank for the year 2010-2011, Singapore stood on the top of the list. Singapore came out first in the Ease of doing business Rank.

Analysis

Comparison between the Benchmark and the two countries

According to the Doing Business Report 2010, two-third of reforms is recorded in developing economies. Many reforms were prompted owing to the recession and the financial crisis. Many reforms took place mainly in the starting of business, constructions, registering property among others. In 2010, Madagascar stood among those countries which made reforms to make business easier to do and Mauritius was among those which made reforms for employing more workers, registering property and getting credit. In the year 2010, Mauritius made 6 reforms while Madagascar made only 1 reform. Below are the comparisons between Mauritius and Madagascar with the benchmark.

 

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Starting a Business (rank)

12

5

10

12

4

4

Procedures (number)

2

2

5

5

3

3

Time (days)

7

7

6

6

3

3

Cost (% GNI per capita)

6.2

12.9

4.1

3.8

0.7

0.7

Paid-in min. capital (% of GNI per capita)

207.4

248.1

0

0

0

0

Source: Doing Business Database

In starting a business, Singapore is ranked first followed by Mauritius and finally Madagascar. However, the trend was not the same in 2011 as Madagascar (5) nearly reach Singapore (4) while Mauritius deteriorated. Madagascar has been able to make such advancement even if the cost of doing business as a percentage of Gross National Income (GNI) per capita has increase by 108.06% as compared to a decrease in Mauritius by only 7.32%. However the number of procedures to incorporate a company is quite low even if it takes much time to start the business. Following the benchmark in 2011 starting a business would be easier in Madagascar than Mauritius.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Dealing with construction permits (rank)

108

136

42

39

2

2

Procedures (number)

16

16

16

16

11

11

Time (days)

172

172

143

143

25

25

Cost (% of income per capita)

1250.6

1298.7

35.5

32.3

19.9

19.7

Source: Doing Business Database

In 2011, Mauritius is quite ahead by 3.5 times over Madagascar in dealing with construction permit. On average Singapore takes 25 days to grant a construction permit whereas Mauritius and Madagascar takes 5 to 7 times more respectively. It can be seen that on a global basis Madagascar has lost 28 places from 2010 to 2011 and the most important threat is that the cost accounts is 1298.7% of the total income per capita as compare to Mauritius which is 32.3% and Singapore 19.7%.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Registering property(rank)

152

69

66

69

16

15

Procedures (number)

6

6

4

4

3

3

Time (days)

74

74

26

26

5

5

Cost (% of property value)

9.4

9.8

10.7

10.6

2.8

2.8

Source: Doing Business Database

Registering property has become easier in Madagascar and Singapore whereas Mauritius moved behind. Even if it takes more days and the cost of registering a property has increase, Madagascar has been able to change its rank from 152nd in 2010 to 69th in 2011. Although Singapore is has been the first in doing business in the two consecutive years, it still faces difficulties in registering property as it is highly influenced by the laws prevailing in the country.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Getting credit (rank)

167

46

87

89

4

6

Legal rights index (0-10)

2

2

6

6

10

10

Credit information index (0-6)

1

0

3

3

4

4

Public registry coverage (% adults)

0.1

0

36.8

49.8

0

0

Private bureau coverage (% adults)

0

0

0

0

40.3

60.8

Source: Doing Business Database

There has been much amelioration in Madagascar even if the legal right index is relatively at 2, its overall rank in getting credit has shifted from 167th in 2010 to 46th in 2011 whereas both Mauritius and Singapore experienced a deterioration.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Protecting investors (rank)

57

20

12

12

2

2

Extent of disclosure index (0-10)

5

5

6

6

10

10

Extent of director liability (0-10)

6

6

8

8

9

9

Ease of shareholder suits index (0-10)

6

6

9

9

9

9

Strength of investor protection index (0-10)

5.7

5.7

7.7

7.7

9.3

9.3

Source: Doing Business Database

There have been new laws implemented to protect investors in Madagascar as in 2011 it appreciated in ranks by 37 places whereas Mauritius remains constant. In terms of disclosure, the extent to which directors are liable, the ease of shareholder to invest and the strength of investor’s protection are more efficient in Singapore as compare to Mauritius. Whoever there is a large gap between the index of Singapore to that of Madagascar.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Paying taxes (rank)

74

33

12

12

5

4

Payments (number of year)

23

23

7

7

5

5

Time (hours per year)

201

201

161

161

84

84

Total tax rate (% of profit)

39.2

37.7

26

27.2

27.4

25

Source: Doing Business Database

Here again, in the tax payment rank, Singapore came first. The difference in the ranking may be because of the different tax rules that prevail in the particular country. In Mauritius a flat rate of 15% is applies. However, in Madagascar, VAT rate is at 20%, tax on interest is at 22%, property tax is 10%, etc. the tax rates vary. From 2010-2011, it can be observed that paying taxes rank has improved for Madagascar while for Singapore and Mauritius is rather stable.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Trading across borders (rank)

111

66

19

22

1

1

Documents to export ( number)

4

4

5

5

4

4

Time to export (days)

21

21

11

10

5

5

Cost to export (US$ per container)

1,279

1,197

737

737

456

456

Documents to import (number)

9

9

6

6

4

4

Time to import (days)

26

24

11

10

3

4

Cost to import (US$ per container)

1,660

1,555

689

689

439

439

Source: Doing Business Database

As far as trading is concerned, Singapore is the best country performance. Singapore, being the fourth leading financial centre, the country must be good at offering services. Thus exporting these services will enable Singapore to maintain a good on its balance of payments. Mauritius experienced deterioration in its rank while Madagascar improved. This may be explained by reforms taken by the Malagasy government to exploit its resources.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Enforcing contracts (rank)

155

65

66

61

13

13

Procedures (number)

38

38

36

36

21

21

Time (days)

871

871

720

645

150

150

Cost (% of claim)

42.4

42.4

16.3

16.3

25.8

25.8

Source: Doing Business Database

Enforcing contracts assesses the efficiency of the judicial system by following the evolution of a commercial sale dispute over the quality of goods and tracking the time, cost and number of procedures involved from the moment the plaintiff files the lawsuit until payment is received. From 2010-2011, both Madagascar and Mauritius improved their judicial system by enforcing existing laws.

Madagascar

Mauritius

Singapore

2010

2011

2010

2011

2010

2011

Rank in Doing Business

134

140

17

20

1

1

Source: Doing Business Database

Taking all these factors into consideration, it can be seen that Singapore is the best economy in which an investor can operate. For the two consecutive years, it was rank the first. Mauritius is quite a stable country as it was rank 17th in 2010 and 20th in 2011. This may happen due to the new corporate social responsibility tax was introduced and investors were moving towards Madagascar.

BUSINESS REFORMS

Some business Reforms that took place between 2010 and 2011

A quicker pace of regulatory reform in favor of entrepreneur is good news in emerging countries. Starting a business is a leap of faith under any situation. For the poor, starting a business or finding a job is a significant means to get out of poverty. Every year business reforms are made in each country in the world to facilitate the ease of doing business and attracting investors.

Since 2008, Mauritius has implemented a centralized database that link the company registry with the tax department, social security, and local authorities to faster business start-up operations. Online forms are made available to reduce the number of procedure by simplifying the process and formalities that are required.

Property registration is cheaper as the registration fee is reduced. Only two procedures are required that is to obtain clearance certificate from the Waste Water Authority and to obtain a tax clearance certificate for municipal taxes. Furthermore statutory time limit of 15 days is set to obtain the final property title from the Land Registry.

Tax burden has been decrease for company. However, in 2011 a new corporate social responsibility tax has been introduced thus discouraging investors.

A new computerized risk management system for inspections has been implemented to ease transaction across borders. Furthermore an electronic submission for customs declaration and bill of lading without requirement of physical copies was introduced to speed up trade process.

In 2010, a new insolvency law was introduced to rehabilitation procedure for companies as an alternative to winding up, and defines the rights and obligations of creditors and debtors and sanctions for those who abuse the system.

To enforce contract a specialized commercial division in the Supreme Court is created and has speeded up the resolution of commercial disputes by recruiting more judges and adding more courtrooms.

On the other hand, Madagascar business registration was reduced to just eight days and the professional tax was abolished to reduce cost, for example the elimination of stamp duty and elimination of the minimum capital requirement.

Paying taxes is easier through use of computerized systems at the Tax Office and simplified filing requirements. Capital gains tax was abolished effective in January 2008, corporate income tax is reduced from 30% to 25% and the VAT rate has been increased from 18% to 20%.

There was also progress in communication and coordination between customs and the terminal port operators through its single-window system (GASYNET), dropping both the time and the cost to export and import. Consequently, reforms in both the paying taxes stage and trading across borders stage made business easier to perform.

For Land Registry, more staff was hired, more computers were added and the number of offices was increased. However, it was more costly to transfer property due by introduction the mandatory use of notary for property transactions.

Conclusion

Following the benchmark, Singapore, both the Mauritian Government and the Malagasy government policies are geared towards reaching that benchmark. It is quite obvious that according to the analysis and observations made, Mauritius is closer to the benchmark than Madagascar. There is still a lot of progress to be done on the part of Madagascar. However to develop business activities, Madagascar is providing financial incentives to business man, tax holiday has been lengthened and readymade infrastructure is provided. Businessmen who want to trade in low cost will find Madagascar as a potential country to carry out their activity. Many textile factories (firms in the EPZ sector) are moving from Mauritius towards Madagascar to facilitate their operations and maximizing their return.