Apart from being the highest ranked economy in Sub-Saharan Africa on the World Bank’s ‘Ease of Doing Business’ Index, Mauritius is attracting growing numbers of local investors through sheer geographical proximity and the ability to “follow their money”, says Richard Neal, director at independent fiduciary consultancy Sovereign Trust.
“Mauritius offers one of the most progressive investment environments on the continent – so much so that it’s known as the ‘Singapore of Africa’,” said Neal.
“For many South Africans, though, it’s not just a relatively safe way to move into the world of offshore investing, but an increasingly attractive back-up plan for people who are worried about the current levels of political and economic instability in South Africa.”
Over the past 10 years total wealth held in Mauritius has risen by 195% in US dollar terms, making it the fastest growing wealth market in Africa and one of the top three worldwide. Total wealth held in Mauritius now amounts to $43 billion, while per capita stands at $33,000, making Mauritius the wealthiest country in Africa.
The sharp rise in Mauritius’ wealth has been primary due to the country’s fundamentals – strong economic growth and a stable government – and also in its ability to draw wealthy individuals to do business and live there.
South Africans have long been among the leading foreign purchasers of residential property in Mauritius, according to statistics by the Mauritian Board of Investments, largely to take advantage of the various residency programmes offered by Mauritius.
Nico van Zyl, director at Sovereign Trust (Mauritius), said recent amendments to rules around foreign ownership of property – which mean that foreigners can now purchase commercial property, as well as certain residential properties – have only added to the popularity of the country as an investment destination.
“Many South Africans are looking at setting up headquarters or satellite offices in Mauritius, both for the tax incentives and access to the qualified, yet affordable, local workforce,” said Van Zyl.
“Establishing a new business in Mauritius is extremely easy, with quick and efficient processes and no requirement for local partnership.”
Part of the attraction of Mauritius for foreign investors has always been its simple taxation system: corporate income and personal income are taxed at a maximum rate of 15%, with further tax concessions available.
Resident individuals are taxed only on Mauritius-source income and foreign income that is remitted to Mauritius. Mauritius does not levy withholding tax on dividends and there is no capital gains tax, property tax or inheritance tax.
In addition, there are no foreign exchange controls, and a well-developed institutional infrastructure, with many international banks, legal and accounting firms having a strong presence in the country. In particular, Mauritius has established itself as a leading regional financial centre, specialising in offshore banking, fund management and private banking.
Popular avenues of investment for foreigners looking to invest in Mauritius, and obtain residency, have included:
- Occupation Permit (OP) – a combined work and residence permit that allows foreign nationals to work and reside in Mauritius through an Initial investment of $100,000 in a business activity that should generate an annual turnover of at least MUR2 million (circa $58,000) for the first year and cumulative turnover of at least MUR10 million for the subsequent two years.
- Residence Permit (RP) – a residence permit that allows foreign nationals to reside in Mauritius through the acquisition of a residential property under the Property Development Scheme (PDS) when he/she has invested more than $500,000 or its equivalent in any freely convertible foreign currency.
- Permanent Residence Scheme (PRS) – foreign nationals investing more than $500,000 into the Permanent Resident Investment Fund (PRIF) for a period of ten years are eligible for permanent residence, along with their spouse and children under 18 years of age. For children over 18, an additional deposit of $100,000 (R1.35 million) per person is required.
As an alternative, the sum deposited into the PRIF, or a portion of it, can be reinvested for a period of five years in a qualifying activity approved by the Board of Investment (BOI), securities officially listed on the Mauritius Stock Exchange or an equity fund in Mauritius.
The list of BOI-approved business activities comprises – agro-based industry, audio-visual, cinema and communication, banking, construction, education, environment-friendly and green energy products, financial services, fisheries and marine resources, freeport, information technology, infrastructure, insurance, leisure, manufacturing, marina development, tourism and warehousing.
Under this scheme, the investor is exempted from the requirement to obtain a work permit and can acquire immovable property for personal use.
Subject to maintaining a good character and the $500,000 investment, the investor remains a permanent resident and there is no statutory requirement for a number of days to be spent in Mauritius in order to retain permanent residency status. The investor retains any profits accruing from their investment.
In addition to these residency schemes, the government of Mauritius has just announced a new citizenship programme as part of the Budget issued on 15 June 2018.
The Economic Development Board will manage two schemes to attract High Net Worth Individuals who satisfy defined criteria.
The first scheme will offer foreign nationals the opportunity to obtain Mauritian citizenship provided they make a non-refundable contribution of $1 million (R13.5 million) to a Mauritius Sovereign Fund.
For their spouse and dependents, they will have to make an additional contribution of $100,000 (R1.35 million) per member of family.
The second scheme will offer the opportunity to obtain a Mauritian passport provided they make a non-refundable contribution of $500,000 (R6.75 million) to the Mauritius Sovereign Fund. For their spouse and dependents, they will have to make an additional contribution of $50,000 (R675,000) per passport.
The Mauritius Sovereign Fund will be managed by the Mauritius National Investment Authority.
Any withdrawal from the Fund will be used to meet disbursements for new capital projects and public debt repayments.
“The bottom line is that Mauritius is a world-class investment destination, that welcomes investment and makes it easy for investors from around the world. For South Africans, the familiarity and ease of accessibility makes it even more attractive,” said Neal.