As the world is becoming a global village,the possibility of multinational companies relocating to other jurisdictions has become a reality. In the recent Global Competitiveness Report 2014-15, carried out by the World Economic Forum, Mauritius ranks first in Africa, ahead of some of the most developed economies on the continent. As the competitiveness space becomes more prominent, multinationals tend to assess both commercial and tax considerations to carry out their business. As a consequence, tax authorities around the globe find their tax bases eroded. In this respect, there is constant pressure from the Organisation for Economic Cooperation and Development (OECD) and the Group of Eight (G8) to address the tax foregone.
An emerging trend in taxation has been the OECD’s initiative of base erosion and profit shifting with increasing emphasis on transfer pricing and the exchange of information. With respect to the latter, the United States has introduced a Foreign Account Tax Compliance Act (FATCA), whilst the OECD has developed a common reporting standard for the automatic exchange of financial account information.
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