Mr Sudhir Seesungkur a prononcé un discours lors de la cérémonie protocolaire de l’atelier de travail de International Fiscal Association Conference à l’Hôtel Sofitel Imperial de Flic en Flac le 17 Mai 2018.
I wish to start by thanking IFA Mauritius for hosting this conference and I wish to particularly thank all our international guests who have travelled such a long way to be with us for these two days. I hope that you will have some free time to escape from the digital world to connect to our beautiful island with its smiling faces, its rich culture, its unique scenery, its vibrant colours and flavours. Let your take aways be not only fruitful discussions you will be having over the next two days but also pleasant memories of your stay with us.
Ladies and gentlemen, your presence here today reflects our shared priority to advance the agenda of the day. When I was asked to address this august assembly, I started to do some thinking on the subject and my initial question was: How do we go about putting a value on digital activity for taxation purposes? How do we tax when there is no physical presence or minimal presence? How do we value data?
Ladies and gentlemen, we google everything these days from where to dine to where and what to shop, we spend many hours on social networks and online bazaars. In so doing, we are providing data on the things we like. What is the value of this data we are providing and how is this value measured in calculating advertising returns and other fees?
Ladies and gentlemen, even before we realise it, over the past couple of years our whole lives have flipped digital. An observation I often make in restaurants these days is you will find families, from the youngest to the eldest, all busy connecting real-time on their respective smartphones rather than engaging in face-to-face communication with close ones. So, indeed, technology is changing the manner in which we live, the way we work, the way we play, the way we rest, the way we shop and the way we do business. Many of you running organisations will agree that investment in connected devices and artificial intelligence is escalating at epidemic rate year after year and represents the most important expenditure item.
Now, we are here this morning to discuss how do we measure economic activity and how do we tax it? One thing is for sure, no one really knows where the digital economy is heading and how to tax it with precision. The title of this morning’s session is whether the digital economy is unfinished business. Ladies and gentlemen, from my perspective it has not even really started let alone be unfinished! We are now in the business of self-drive cars. We do not really know what next. I do not think anyone has been able to accurately predict till now till where the disruption will lead to. Digital innovation is creating a revolution across every sector of the economy from health to education and transport.
Ladies and Gentlemen, the incessant digitalisation of our economies will not stop and should not stop because it is greatly enhancing the quality of lives, the well-being and health of our population. Digitalisation is no longer part of the economy — it is the economy. We have reached this far even before we know it. We have sleepwalked into a completely digital world. While we must be ready to make the most of it for the well-being and prosperity of our people, we must also prepare to guard against the challenges it will bring along.
Ladies and gentlemen, technology has turned us into a global township. Boundaries, distance, geography have all been superseded. The rise of the digital economy makes it much easier for companies to be based anywhere in the world from Alaska to the remotest village in Africa providing services to customers around the globe. How will any tax system keep up with this state of affairs? How can we allocate profits with precision between the countries in which a global company operates? Will we ever be able to ensure that profits are taxed where the economic activity generating them is actually taking place? How can we effectively lift the veil of complicated business structures, convoluted financial transactions and contrived arrangements used by some international businesses which use aggressive tax strategies to avoid tax by artificially shifting profits to low or no-tax locations. It is a fact that many multinationals are not paying their fair share of taxes in the countries they operate. This is true for example for the internet giants of the world. All these are very taxing issues indeed for Governments and policy makers. How do we explain to the people that it is okay for the struggling SMEs to pay taxes while the corporate giants are being clever about it. We need to ensure fairness and equity.
Ladies and Gentlemen, addressing base erosion and profit shifting has become a key priority of Governments around the world. We are all grappling with the problem to try and find effective, sustainable solutions. With global businesses, the only genuine solution is an international one – even if it will take us some time to get things right. For this reason, I wish to thank Mr. Ramloll and his team for their sustained effort in organising this conference and bring on a same platform like-minded people from various jurisdictions to share notes on challenges they are facing in their part of the world and discuss common solutions. Reform in tax administration has become a topic of its own and stands high in the agenda of Tax Authorities. It is important that policy makers sit together and discuss how to contain the problem and address systemic challenges. The objective is to ensure the right amount of tax is paid by the right person at the right place where economic value is created.
Ladies and gentlemen, I have been entrusted with the Financial Services Sector within my ministerial portfolio. This sector is an important pillar of the Mauritian economy contributing 12.1% to the GDP and it is growing at a rate of 5.5%. Our Government has invested much effort to position Mauritius as an International Financial Centre of excellence and we have put in place the regulatory framework so that we can play an economically integrated role within our regional economic blocks and beyond. Ladies and gentlemen, our traditional financial services landscape as we know it is being toppled by operators leveraging on Financial Technologies to deliver new and existing services in more relevant and convenient ways to consumers and businesses. Against this backdrop of change, it is the resolve of the Government to provide a stable and trusted business environment for international investors who have selected our jurisdiction. We are accordingly keen to embrace international principles and implement international standard setting initiatives, including those connected with BEPS, to help us embrace the digital revolution and at the same time guard against the challenges that come with it. You will all agree with me that consistent international tax standards, respected by all, can only help foster greater cross-border trade and investments. This will also provide a level-playing field across jurisdictions.
Ladies and gentlemen, the challenges and increasing uncertainty in the global tax environment also require improvements to the dispute resolution and resolution process. Unresolved international tax disputes can undermine co-operation and discourage investment. I believe this is on the agenda for discussion tomorrow. Mauritius has under the MLI adopted the BEPS minimum standard for enhancing dispute resolution. The Mandatory Binding Arbitration provisions will also be included in our DTAs to provide certainty to taxpayers that treaty-related disputes will be resolved within a specified timeframe. My learned colleagues will be able to tell you more about this tomorrow.
Ladies and gentlemen, I will leave with a few words from Mr. Semeta, EU Commissioner for Taxation, Customs, Statistics, Anti-fraud and Audit, in a Press Release of the European Union in 2013, and I quote:
“Today’s tax systems were conceived in a pre-computer age. So, it is no surprise that they often clash with the modern, digital economy. Taxation must not be an obstacle to all that is good about the digital revolution. Yet, we must also ensure that the digital sector plays fair and pays fair.”
Ladies and gentlemen, much more will be said and written in years to come on taxation and the digital economy. Multinationals will continue to come up with new tax strategies to take advantage of disparities. Many of you here will continue to follow with interest the evolving concepts and regulations, trying your best to make sense of inherent complexities. My Government has, through its many initiatives, shown that it is fully tuned to digital mode for Mauritius to become even more digital and make the most of it despite these complexities and the host of disruptions. We are committed through global initiatives and collaborative partnerships such as the IFA to address the challenges of a digital economy so that Mauritius can continue to be a great place to work, play and grow businesses.
Ladies and Gentlemen, I wish you all fruitful deliberations.
I thank you for your kind attention.