CLA News / Mauritius as a Commonwealth Financial Hub: A Legal and Treaty-Driven Gateway for Cross-Border Investment by Assadullah Durbarry
Introduction
In an era where capital is increasingly mobile but regulation remains jurisdiction-bound, small states with credible legal systems and outward-facing financial architectures are playing an outsized role in shaping cross-border investment. Within the Commonwealth, Mauritius has emerged as a distinctive example of how a rules-based legal framework, coupled with an extensive treaty network and regulatory credibility, can transform a small island economy into a strategic financial gateway connecting markets across Africa, Asia, and beyond.
This positioning is not the result of low taxation or regulatory arbitrage, as is sometimes assumed, but rather of a deliberate legal and institutional strategy that aligns domestic law, international standards, and investor protection into a coherent and predictable investment platform.
Legal Stability as Economic Infrastructure
At the heart of the Mauritius financial centre is a hybrid legal system that blends common law and civil law traditions. This dual heritage offers a degree of familiarity to both Anglo-Commonwealth investors and continental European institutions, reducing legal friction in cross-border transactions. The Companies Act 2001, the Financial Services Act 2007, and the Securities Act 2005 collectively provide the backbone for corporate structuring, financial services licensing, and capital markets activity.
This statutory framework is complemented by an independent judiciary and an integrated regulator, the Financial Services Commission (FSC), established in 2001 under the Financial Services Act 2007. The FSC operates on a risk-based supervisory model aligned with international standards issued by organisations such as the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS).[i] For investors and fund managers operating across multiple Commonwealth jurisdictions, this regulatory consistency provides a form of legal infrastructure that is as valuable as physical connectivity or market size.
The Treaty Network as a Strategic Asset
One of Mauritius’s most significant contributions to Commonwealth investment architecture lies in its network of bilateral agreements. To date, Mauritius has concluded 46 Double Taxation Avoidance Agreements (DTAAs) and maintains 46 Investment Promotion and Protection Agreements (IPPAs), with 29 IPPAs currently in force and a further 15 awaiting ratification.[ii] These treaties are not merely fiscal instruments but legal frameworks that allocate taxing rights, define permanent establishment thresholds, and establish dispute resolution mechanisms between states.
For investors from Commonwealth countries, this treaty network offers a degree of predictability in how cross-border income will be treated, particularly in relation to dividends, interest, capital gains, and service fees. The practical value of this predictability lies in reducing both fiscal uncertainty and the risk of double taxation, which can otherwise act as a significant barrier to regional investment.
In recent years, Mauritius has recalibrated its treaty policy to align more closely with international standards on base erosion and profit shifting, principal purpose tests, and substance requirements. The March 2024 Protocol amending the India-Mauritius DTAA to incorporate the Principal Purpose Test exemplifies this evolution.[iii] This shift reflects a broader trend across the Commonwealth towards balancing investment facilitation with transparency and anti-abuse safeguards.
Regulatory Credibility and International Compliance
A financial centre’s long-term viability depends not only on its laws but on the credibility of its regulatory institutions. Mauritius has invested heavily in aligning its financial services framework with international benchmarks, including those of the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD).
This commitment was demonstrated when, following its placement on the FATF grey list in February 2020, Mauritius implemented comprehensive reforms and was removed from the list in October 2021—achieving compliance with 39 of 40 FATF recommendations.[iv] The substance requirements introduced in 2019, mandating that global business companies maintain adequate physical presence, employ qualified personnel, and incur proportionate expenditure in Mauritius, reflect a commitment to ensuring that the jurisdiction serves genuine commercial purposes.
This alignment has practical implications for Commonwealth investors. Fund structures, special purpose vehicles, and financial institutions licensed in Mauritius are generally recognised by international banks, development finance institutions, and institutional investors as operating within a credible and supervised environment.
Bridging Commonwealth Markets
Mauritius’s geographic and institutional positioning allows it to function as a bridge between different parts of the Commonwealth. As a member state of the African Union, the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC), Mauritius offers investors preferential access to continental markets.[v] The entry into force of the African Continental Free Trade Area (AfCFTA), which Mauritius ratified in October 2019, presents additional opportunities for Mauritius-based entities to participate in intra-African trade and investment flows.
Simultaneously, the comprehensive economic cooperation agreements with major Asian economies position Mauritius as an effective intermediary for Asian capital seeking African opportunities. The China-Mauritius Free Trade Agreement, which entered into force on 1 January 2021, represents China’s first FTA with an African country.[vi]
Governance, Transparency, and the Future of Financial Centres
The role of financial centres within the Commonwealth is evolving. Investors, regulators, and civil society increasingly expect jurisdictions to demonstrate not only efficiency but also accountability and social responsibility. Issues such as environmental, social, and governance compliance, tax transparency, and sustainable finance are becoming integral to how legal frameworks are assessed.
Mauritius has begun to integrate these considerations into its financial services landscape, particularly through the development of green finance initiatives and sustainability-linked investment structures. The FSC’s new regulatory framework for spot commodity markets, including provisions for carbon offsets and environmentally-linked financial instruments, demonstrates continued regulatory innovation.[vii]
Conclusion
Mauritius’s emergence as a Commonwealth financial hub illustrates how law, treaties, and regulatory institutions can function as strategic economic assets. By combining legal stability, a credible regulatory framework, and an internationally aligned treaty network, it has positioned itself as a gateway jurisdiction for cross-border investment across multiple regions.
For Commonwealth countries seeking to deepen economic integration and attract sustainable capital, the Mauritian experience offers a broader lesson. Financial centres are not built solely through fiscal incentives or market size, but through the deliberate construction of legal systems that inspire confidence, enable cooperation, and adapt to evolving global standards. As the Commonwealth continues to navigate the complex interplay between development, regulation, and global investment, jurisdictions that invest in legal credibility and institutional trust are likely to play an increasingly central role in shaping the future of cross-border finance.
Author: Me. Assadullah Durbarry BSC, MBA, LLM, GDLP, ACIArb
Designation: Barrister-at-Law Mauritius, & Admitted in Australia
Principal, Durbarry Chambers, Mauritius
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Notes
[i] Financial Services Commission, Mauritius <https://www.fscmauritius.org>; Financial Services Act 2007; Securities Act 2005; Insurance Act 2005.
[ii] Mauritius Revenue Authority, Double Taxation Agreements <https://www.mra.mu/taxes-duties/international-taxation/double-taxation-agreements>; Economic Development Board Mauritius, Bilateral Agreements <https://edbmauritius.org/bilateral-agreements>.
[iii] Protocol to India-Mauritius DTAA signed on 7 March 2024 to include Principal Purpose Test. See EY Tax Alert (April 2024); KPMG Tax Alert Issue 82 (April 2024).
[iv] FATF Plenary, 21 October 2021; Bank of Mauritius Communiqué <https://www.bom.mu/media/media-releases/mauritius-exits-faft-list-jurisdictions-under-increased-monitoring-list>.
[v] COMESA comprises 21 member states; SADC comprises 16 member states including Mauritius. See TRALAC Trade Law Centre <https://www.tralac.org>.
[vi] China-Mauritius FTA entered into force 1 January 2021. See Ministry of Commerce, PRC <https://fta.mofcom.gov.cn/topic/enmauritius.shtml>; Mauritius Chamber of Commerce and Industry.
[vii] Financial Services (Spot Commodity Market and Intermediaries) Rules 2024, FSC Mauritius.
