The tropical island paradise of Mauritius has thrown open its doors to prospective investors and residents, with increasing numbers of South Africans being attracted by an idyllic lifestyle and a liberal approach to regulation and taxation that makes it easy to start and run a business.
Vidish Jugurnauth, an administration manager at Sovereign Trust (Mauritius) Limited, told the investment seminar in Johannesburg that there are numerous channels open to foreign nationals looking to work, live and acquire property in Mauritius.
“To maintain its economic expansion of recent years, the Mauritian Government is reaching out to foreign talent from overseas and encouraging them to bring their expertise, know-how and investment into the country,” said Jugurnauth. “It also offers professional expatriates and retirees the ability to work or settle in a pleasant environment with a range of fiscal incentives.”
While tourism continues to account for more than 25% of the country’s GDP, Mauritius is making a major play to establish itself as a regional and global finance destination, including banking and business outsourcing. Jugurnauth added, the financial services sector now represents more than 10% of GDP, and the country was rated No 1 for Ease of Doing Business in Africa by the World Bank in 2018.
“There are various options open to prospective investors, depending on your needs and circumstances, but the required investment levels are extremely reasonable. You can also get permanent residency if you buy property through certain channels,” said Jugurnauth.
While Mauritius is reluctant to be seen as a tax haven, there’s no doubt that its liberal tax regime is attractive to investors and residents alike. Corporation tax is a flat 15%, but companies carrying out global business can pay 3% tax or even zero tax under certain circumstances. There is no Capital Gains Tax or tax on profits on the sale of shares in Mauritius.
However, it is vital for businesses looking to establish themselves in Mauritius to ensure that their company and trust structuring is done correctly from a South African tax perspective, said Rone Silke, a consultant at Sovereign Trust (SA) Limited.
“The fact that a company has been incorporated in a foreign jurisdiction, doesn’t mean that it will not be subject to tax in South Africa. A vital consideration when determining tax residency of a company, apart from where a company is incorporated, is where the place of effective management (POEM) is. Should a Mauritian company’s commercial decisions be made in South Africa, the company would be regarded as SA tax resident.” Silke told the seminar.
Also, if the Mauritian company structures its ownership through a foreign trust, it will open up a range of other non-tax related benefits through a presence in Mauritius including, but not limited to, political stability, an effective rand-hedge and wealth protection.
There are a number of different options available by which to structure a business offshore. It is therefore essential to obtain the correct advice to be able to take advantage of the benefits in doing business abroad.