The recent passing of the South African Expropriation Bill to the National Council of Provinces has created havoc among the different actors in the agricultural and food security sectors, especially South African farmers. But where there’s a risk, there is also a solution. Read on to find out where and how you can run a risk-free offshore business.

What is expropriation?

Expropriation is when a government claims private properties against the owners’ wishes to be used for public benefits, such as building railroads or highways or any other type of public infrastructure. In fact, in South Africa, expropriation can be done by “an organ of state or a person empowered by this Act or any other legislation to acquire property through expropriation”. Unfortunately, this means that South African farmers risk losing their properties and that appropriate compensation is not guaranteed.

The South African Expropriation Bill gives two reasons for expropriation:

  • Public purpose, whereby a property can be expropriated for a valid reason, such as building a hospital or a school
  • Public interest, whereby a property can be expropriated in the context of land reform to promote equitable access to all of the country’s natural resources.

It’s worth noting that in case of dispute, the law provides that appropriate compensation should be determined by the court.

What are the consequences of expropriation for South African farmers?

The Expropriation bill comes as a threat to South African farmers for whom raising the capital needed for sustainable farming operations will be more challenging. As regards new farmers, there’s a significant risk that they could be deprived of their property rights at any moment – which would also mean no return on investment.

Moreover, this law is very likely to result in a drop in revenue for farmers due to the decrease in food production. While this might affect the South African economy, others economies can benefit from it. Mauritius, for instance, has kept its doors open for foreign investors, including offshore businesses. Learn how you can set up an offshore business in Mauritius.

What Mauritius has to offer to South African farmers

3,637 km away from South Africa lies Mauritius, a developing nation at the crossroads of Africa and Asia. The island State has, in fact, recently been nominated among the top 30 destinations for foreign investors by Henley Residence Program Index 2023, a report by Henley & Partners. But what are the perks of running an offshore structure in Mauritius for South African farmers?

First of all, Mauritius is a democracy with a stable economy and society. The island can also boast an attractive tax system for foreign investors looking to run an offshore structure, including an 80% exemption of corporate tax income. With a competitive market that meets international business standards, an attractive jurisdiction for international investment, along with a supportive framework for offshore companies, and corporate laws suiting their business requirements, Mauritius guarantees great security for South African farmers interested in venturing here.

What’s more, offshore businesses operating in Mauritius but neither do business locally nor use the Mauritian currency, and are managed from abroad, are exempt from local taxes. The Mauritian jurisdiction also provides for asset protection, which means that investors’ assets run no risk of seizure from the government or frivolous litigation. This is indeed great news for South African farmers seeking risk-free business opportunities.

How can South African farmers benefit from establishing an offshore structure in Mauritius?

The above mentioned-benefits are just some of the many incentives set up by the Mauritian government for foreign investors. If you’re keen on benefiting from these, Blue Azurite is here to guide you. Our team of experts can help you decide which type of offshore structure best suits your activity and accompany you throughout the process, from filing your application to registration, through opening a bank account, and even administrating your business.

Thanks to our familiarity with the various types of business structures in Mauritius, and our understanding of processes, we can help you successfully run your offshore business, and even provide you with resident directors if required, and act as your company’s secretary. Blue Azurite also handles tax residency certificates and double tax treaties for foreign investors.

For South African farmers who would like to set up an offshore family office structure, we can help you find the right balance of powers to avoid the undue influence of siblings. For more information, get in touch with our team and get ready to benefit from all that Mauritius has to offer.

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