A study from New World Wealth reveals why the island of Mauritius has been attracting hundreds of investors. Here are the factors!

This island of Mauritius has been attracting hundreds of investors because of several factors. It offers several advantages, both on a personal and on a professional level, so much so that it is now the fastest growing wealth market in Africa. This was revealed by a study from the intelligence firm New World Wealth. The country earned this title because of the number of millionaires who have decided to establish a business and to move to the country. In the year 2017 alone, this number grew by 20%.

The report looked at the performance of high-net-worth-individuals (HNWIs) in selected African countries between 2006 and 2016. These are individuals with a wealth of $1 million or more. The study placed Mauritius at the top in the continent for HNWIs. The strong growth of millionaires in the island can be attributed to several factors. These are:

  • Migration: a large number of wealthy individuals have moved to the island throughout the past ten years, especially from countries such as France and South Africa. 280 millionaires from the latter alone have migrated to Mauritius since 2006.
  • The jurisdiction’s strong economic growth and its thriving and expanding financial sector, especially in relation to offshore banking, fund management and private banking services.
  • Residency permits are given to a foreigner purchasing a home that is worth US$500,000 or more.
  • Secure ownership rights: This is the most important factor defining successful wealth creation across the globe. Ownership rights are very strong in Mauritius and this motivates people to invest in property and businesses in the country.
  • Low taxes: Related regulations both encourage business formation and appeal to retirees. Company and personal income tax rates are at only 15%, with no inheritance or capital gains tax.
  • Low level of government interference in the business sector, in contrast to other countries such as South Africa which has exchange controls, high taxes, big trade unions and BEE hiring requirements.
  • Ease of doing business in the country. Mauritius is ranked first in World Bank’s 2016 Doing
  • Business Report.
  • A well-developed banking system and stock exchange program. This motivates people to invest their money in the country and to expand their wealth locally. It also ensures that economic growth taking place filters through wealth creation.
  • Those living in Mauritius are free to invest in foreign countries with no exchange controls. As such, the country can be leveraged as a business and investment hub.
  • It is a convenient base for investing and doing business in Southern and Eastern Africa.
  • It has a well-developed free media infrastructure.
  • Good lifestyle with several facilities. Residents can enjoy modern amenities as well as the beaches, golf courses and breath-taking scenery. They can also access first-class food & produce and top schools such as such as Northfields and International Preparatory School (IPS).
  • Safety: Besides its low crime rate, Mauritius has been rated by New World Wealth as the safest country in Africa.
  • Low jobless rate and low inflation rate.

Thanks to all these factors and further developments, it is expected that millionaires will keep moving to the country. According to analysts, there will be a 130% increase over the next decade.

Mauritius launches the 2020 training schedule of the Financial Services Institute, focused on theoretical concepts and their application into real-life business practices through effective knowledge transfer.

In March this year, the Minister of Financial Services and Good Governance Mahen Kumar Seeruttun announced that the Financial Services Institute (FSI) and the Open University of Mauritius will be collaborating to launch new programs related to the financial sector. The offering of the joint award programs is near finalization.

The new programs on offer

This offering is going to focus on theoretical concepts and their application into real-life business practices through effective knowledge transfer. It will lay particular importance on job and future readiness in the financial services field. The FSI was set up in 2018 with a dual mandate of raising competencies and harnessing the employability skills of our Mauritian’s youth for job readiness. This institution is funded by the Government and it constitutes the training arm of the Ministry of Financial Services. It is open for education, training and development at a time when global forces are shaping lives and work. Currently, demands of employers are getting increasingly complex and demands of higher education are intensifying like never before.

Courses offered by the Financial Services Institute

Having for mission to design, develop, market and execute highest quality training for capacity building, the FSI offers the following courses:

  • Exclusive Competency-based Training for Professionals: this training for professionals in the financial services industry will help them meet with the evolving skills and competency requirements. Thus, it will help build an appropriate ecosystem to propel Mauritius as an International Financial Services Centre of excellence with world-class industry professionals.
  • The Bespoke Financial Services Employability Program: this aims to raise the employability skills and knowledge of unemployed graduates thereby supporting the policy of job creation and bringing unemployed youth to the workplace.
  • Empowerment of Women through Board Directorships: this suggests ways and strategies for a career shift in directorship roles by providing practical and actionable tools complemented by real-life stories of board experiences to help create the right opportunities and be ready for it when it happens. It is designed for any employee aspiring to become a board member and newly appointed directors.

A collaboration with Global Finance Mauritius

Moreover, in light of expanding the financial sector and training more individuals into professionals of the fintech firm, the government is implementing other programs. For instance, Minister Seeruttun advanced that there are talks about a project with Global Finance Mauritius. The latter is the apex body representative and broad-based financial services association in Mauritius. These discussions, which have reached an advanced stage, are related to collaborations in the design and conduct of specialist training. It will be inspired from training recommendations set out in the Financial Sector Blueprint.

The importance of training programs

The Minister recognized the importance of continuous training in an address. He advanced that it was a necessity for the prosperity of Mauritius in respect of promoting knowledge and skills. A culture of continuous education had been one of the hallmarks of Asia’s great success stories. For instance, Singapore transformed itself from a developing country to a modern industrial economy in just one generation thanks to this. As such, these new programs are going to enhance the financial services industry which is poised to become the main engine of growth and job creation for the Mauritian economy.

of Mauritius in respect of promoting knowledge and skills. A culture of continuous education had been one of the hallmarks of Asia’s great success stories. For instance, Singapore transformed itself from a developing country to a modern industrial economy in just one generation thanks to this. As such, these new programs are going to enhance the financial services industry which is poised to become the main engine of growth and job creation for the Mauritian economy.

Mauritius has undergone through several improvements and its per-capita income of $10,500 is already way ahead of the region’s average of $4,000!

“Mauritius is a gem in the Indian Ocean”. This has been advanced by many experts in the financial sector. The country is striving to become an International financial centre of excellence in the region and to join the league of high-income countries. It has already undergone through several improvements and its per-capita income of $10,500 is already way ahead of the region’s average of $4,000.

The “tax heaven”

Mauritius has branded itself as a ‘tax heaven’ for quite some time. However, following the ‘Mauritius Leaks’ article, the country has decided to overhaul its tax regime and rebrand itself. As such, it revised several rules around both corporate and personal tax rates, indirect taxes and tax administration. For instance, now, an income-tax holiday supports companies setting up e-commerce platforms and peer-to-peer lending operators. Moreover, rules are aligned with global best practices, including attribution of income according to the “arm’s length” principle.

These changes have had immediate results: The Organization for Economic Co-operation and Development has stated that Mauritius’s tax regime doesn’t permit or encourage harmful practices and International Monetary Fund (IMF) named it among the 10 countries holding 40% of global phantom FDI.

A growing economy

It is predicted that the country’s Gross Domestic Product (GDP) will be 4.1% in 2020. Additionally, the government expects that there will be more Foreign Direct Investment (FDI) in the coming years, especially considering the fact that it has moved to the 13th position (up by seven places) in the World Bank’s Ease of Doing Business 2020 ranking, against an overall “weak performance” across Sub-Saharan Africa.

Additionally, it is now at the second position in the Absa Africa Financial Markets Index which measures the continent’s most advanced financial markets.

Opportunities for foreign investment

To make things easier for foreign development and attract more investors, Mauritius has been creating more opportunities for growth. For instance, it is keen on revitalizing tourism, developing the ocean economy, increasing output of renewable energy, enhancing the deployment and adoption of modern technology and building smart cities. It has enacted the Business Facilitation Act, amending 26 legislations designed to spur private investments. This expedites new business launches, eliminates unnecessary license and permit requirements and streamlines customs processes.

Additionally, it wishes to capitalize on the African Continental Free Trade Area (AfCFTA). This aims to provide incentives for foreign investors targeting the continent’s market of 1.2 billion consumers. As such, it is presenting itself as a manufacturing and financial hub and will also help the island deepen its ties with mainland Africa, especially for its banks.

According to the SBM, one of the largest banks in the country, “Mauritius has successfully tapped into new sectors for sustainable growth”. Developments in its fiscal regime has attracted a new breed of investors. In 2018, France was the biggest source of direct investment in the island with inflows amounting to $74.2 million. It was followed by South Africa at $58.4 million and China with $48.1 million. The UK is also gradually increasing its inflows with $25.3 million.

The Mauritius Africa Fintech hub (MAFH) is a network of experts in the fintech industry that work together to help this particular sector progress. Why should entrepreneurs look into it?

The Mauritius Africa Fintech hub (MAFH) is a network of experts in the fintech industry that work together to help this particular sector progress. Financial-technology is booming and it helps several businesses expand their offerings and benefit from the latest technology. The (MAFH) offers its members several opportunities and avenues for growth.

Why should entrepreneurs be interested in fintech?

Considering developments that are taking place and new techs that are being implemented, the current era is perfect to join the fintech sector. Whether you are an expert wishing to look into a new venture or a tech SME, you will surely benefit from this industry. Why? Because you will have the opportunity to present a wide variety of essential financial solutions to the African unbanked population. These range from digital wallets to internet banking, alternative point of sales, mobile financial products and other life-changing solutions. While a huge number of people do not have access to these facilities, they are becoming increasingly important to consumers in our society.

The benefits of joining MAFH

Investing time and money into the fintech industry can be quite scary to some. Things might seem complicated because they disrupt traditional solutions that have been existing for a long time. That is why it is a good idea to join a network such as the Mauritius Africa Fintech hub. You will be able to enjoy the following benefits:

  • You will be able to plug your startup into a network of pan-African, Mauritian governments, corporates, FSPs, investors, fintech businesses and tech experts.
  • You will receive help to deal with the various regulations, such as regulatory sandbox licences and business registration, in place.
  • You will have access to resources and knowledge from other tech businesses that form part of the ecosystem.
  • You will be able to become acquainted and communicate with potential investors and other funding sources.
  • You will have the opportunity to attend roundtable events with regulatory bodies.
  • You will benefit from Mauritian investor agreements that have been established. These can act as buffers for businesses looking to enter new growing African markets.
  • You will benefit from free workshops with regulators, government representatives and other legislative decision-makers.
  • You will be able to take part into innovation labs run by corporates of MAFH itself and
  • You will have free office space in the MAFH building even if you do not live in Mauritius.

Why do entrepreneurs choose to work in Mauritius?

Setting up a business in Mauritius offers SMEs several advantages. It is the ideal location because of its strong reputation or safety. The island has several Investment Promotion and Protection Agreements (IPPAs) in place with a number of African states. Moreover, it has an International Financial Centre, which guarantees its reputation for safety. Additionally, The Mauritian business world is very famous for its corporate governance culture as well as its stability. As such, it is the ideal sandbox environment for anyone who is new in this industry.

Mauritius is now moving towards offshore banking, business outsourcing and luxury real estate. The country is trying to become a fintech hub of excellence.

Mauritius is an island found in the Indian Ocean which markets itself as a link between Africa and Asia. A major part of its economy is traditionally based on sugar, textile and tourism. However, it is now moving towards offshore banking, business outsourcing and luxury real estate. The country is trying to become a fintech hub of excellence.

The Umbrella License

In 2019, Mauritius had announced several key measures and new regulations to promote the island as an international financial centre. These include an umbrella license for wealth management providers, promotion of REITS and boosting the fintech sector.

In his annual budget speech last year, the country’s finance minister revealed that all wealth management service providers will be granted an umbrella license. He advanced that the Mauritius Financial Services Commission will sign an agreement with the Gujarat International Finance Tec City, which is found in India, to recognize Mauritian licensed funds and management companies as being qualified to operate in the Gujarat jurisdiction.

Fintech investment

Several changes to drive fintech investment was also announced. To cement Mauritius’s reputation as and IFC, the government has proposed:

  • To establish financial advisory services that are powered by robotics and artificial intelligence,
  • To introduce a new license for fintech service providers,
  • To focus on self-regulation for fintech activities in consultation with United Nations Office on Drugs and Crime,
  • To implement the use of e-signatures and e-licenses on a pilot basis and
  • To create crowdfunding as a new lisensable activity.

Moreover, to boost international investor’s trust in our financial services sector, the existing regulatory framework will be reinforced. Some of the amendments involve:

  • The introduction of a Financial Crime Commission. It is going to act as an apex body to ensure greater coordination and coherence among the relevant bodies investigating and dealing with financial crimes,
  • The development of a financial data handling code of conduct by the FSC. This will handle and address cyber risks and
  • The Bank of Mauritius, FIU and FSC are going to introduce industry-wide Practice Notes with respect to handling clients’ requests.

Other regulatory changes

Several new regulations and changes were announced so that Mauritius could fulfill its aim to diversify its product base as an IFC. First of all, it is going to promote the development of Real Estate Investment Trusts (REITs). It is planning to do so with an attractive tax regime. It is also going to work on a scheme for headquartering e-commerce activities.

Additionally, more services will be available thanks to the introduction of a framework for Green Finance that is in line with the Marrakesh Pledge. This is a continental coalition of African Capital Markets Regulators and Exchanges dedicated to fostering green financing on the continent.

Moreover, a new trading platform at the Stock Exchange of Mauritius will be established. This will allow medium-sized profitable enterprises that are not qualified for listing on the official DEM markets to raise capital and trade their shares.

A Mauritian Limited Partnership is a combination of features found in a company and a partnership

A Mauritian Limited Partnership is a combination of features found in a company and a partnership. Owners are allowed to operate as a partnership with a separate legal personality. Thus, it offers a flexible vehicle that is ideal to conduct investment and funding activities, but it is also suitable for professionals such as lawyers, accountants and consultants. Limited Partnerships (LPs) are allowed to carry out any lawful business, in accordance to its partnership agreement, in Mauritius or from within Mauritius with individuals both in and outside the island. They are governed by the Limited Partnership Act 2011 and the Financial Services Act and Securities Act.

Partners of Limited Partnerships

A Limited Partnership must have at least one General Partner (GP) and one Limited Partner (LP). A person can be both a GP and LP at the same time. A partner may not be removed unless the ability to do so is stipulated in the partnership agreement.

General Partner

  • The GP can be an individual, body corporate or unincorporated, société or partnership or any other body of person in Mauritius or elsewhere,
  • He is the agent of the Limited Partnership and his acts are binding upon the Limited Partnership, and
  • He invests capital, manages the business and is liable for obligations and debts for partnership debts without any limitation.

Limited Partner

  • The LP can be an individual, body corporate or unincorporated, société or partnership or any other body of person in Mauritius or elsewhere,
  • The LP benefits from limitation of its liability to the capital contributed or agreed to be contributed to the LP,
  • The LP has no right to execute documents or take any decisions whatsoever in the partnership,
  • He cannot participate in the conduct and management of the partnership and
  • He not personally liable for the debts of the partnership beyond his capital contribution.

What are the key features of Limited Partnerships?

  • LPs can choose to have a legal personality or not at any time,
  • There are no restrictions on the number of partners,
  • The name of the LP must end with the words “Limited Partnership”, or “L.P.”, or “LP”,
  • The LP must have a registered agent in Mauritius, unless one General Partner is a resident of the country,
  • General Partners are equally responsible and liable for the debts and obligations of the LP but the limited partners are only liable to the extent of their agreed contributions, unless they participate in the management of the LP,
  • LPs must have a relationship agreement,
  • LPs must maintain a register of partners, account of the capital contributions and returns, accounting records, minutes of meeting of the GPs and copies of all statutory documents,
  • Financial statements must be filed with the registrar unless the LP holds a global business licence, in which case, the financial statements are filed with the FSC.
  • LPs must have a registered office in Mauritius. However, this may not be its principal place of business.
Strategically located on the trade route, Mauritius offers several advantages to anyone wishing to conduct business on the island.

Strategically located on the trade route between Europe, Asia and Africa, Mauritius offers several advantages to anyone wishing to conduct business on the island. It is the perfect jurisdiction for anyone looking for a global manufacturing hub. The benefits it offers are explored below.

Business environment

Mauritius is very famous for its ease of doing business. In fact, it is ranked at number one in Africa for almost every business indicator. Setting up a company and an offshore bank account in the country is very simple even for a foreigner. Along the same lines, it is not complicated to relocate to the island, buy property and get occupation permits. As expected from any jurisdiction, there are some documentary requirements and checks. Nonetheless, foreigners can easily go through the processes with the help of a company like ours. With our assistance, they can easily buy commercial property in Mauritius and rent factories and warehouses for low prices.

Modern infrastructure

The island has a Freeport and modern infrastructure with excellent global logistics by both air and sea. Additionally, if you plan on establishing a business in Mauritius, you will not have difficulties conducting your day-to-day operations. The local population is well-educated, cost-effective and bilingual, speaking English and French. Besides that, Madagascar is often used for outsourcing certain activities, especially for textiles and this considerably reduces the costs.

Preferential access to the market

Mauritius has in place several regional Agreements, such as SADC, COMESA and IOC but also AGOA and the Interim EPA with the US and the EU respectively. Each one of these will offer foreign investors different trade and access benefits, depending on where they are exporting to. Additionally, the country has several bilateral treaties with other jurisdictions in Africa that caters for more tax, business and protection advantages. Thanks to these agreements, Mauritius is a very popular choice for trading and holding companies.

Fiscal incentives

At the time of writing, companies can benefit from the following fiscal incentives

  • 8-year income tax-holiday for companies engaged in the manufacturing of pharmaceutical products, medical devices and high-tech products,
  • 3 per cent corporate tax on profits derived from exports of goods,
  • No import duties on equipment and raw material,
  • No export duties in Mauritius,
  • VAT on raw materials is payable at customs clearance but reimbursable on exports
  • Investment Tax Credit of 5% – 15% per year (i.e. 15% – 45% over three years) for investment in high-tech manufacturing equipment (the credit amount will depend on the nature of the activity),
  • Accelerated depreciation of 50% on machinery, equipment and construction of industrial premises dedicated to manufacturing activities,
  • Companies can claim a double deduction in respect of qualifying expenditure on R&D until income year 2021-2022,
  • No Registration Duty and Land Transfer Tax on any transfer of a building or land earmarked for the construction of a building, to be utilised for setup of qualifying high-tech manufacturing activities, and

Accelerated depreciation of 50 percent per annum on capital expenditure incurred on R&D.

The 2019-2020 Budget proposed several fiscal measures that aims at consolidating the existing tax framework and at aligning the island’s tax regime with international standards.

The 2019-2020 Budget proposed several fiscal measures that aims at consolidating the existing tax framework and at aligning the island’s tax regime with international standards. The government announced further investment in the public infrastructure and in incentives related to innovation-driven activities. These will establish Mauritius as a fintech hub. Additionally new legislations will be introduced in terms of controlled foreign companies.

Tax Holidays for companies

  • Innovation Box Regime: Companies that have been recently set up and that are engaged in innovation-driven activities will be able to benefit from a tax holiday of 8 years on income derived from their intellectual property assets developed in Mauritius. However, they must meet pre-defined requirements that are in line with BEPS regulations. Additionally, as from the 10th of June 2019, even existing companies could benefit from the eight-year tax holiday.
  • E-commerce platforms: Companies that aim to operate an e-commerce platform and that will be implemented before the 30th of June 2025 will be granted a 5 year tax holiday.
  • Peer-to-Peer landing: In 2018, the FSC published the Peer-to-Peer Lending Rules. Following this, it has been announced that Peer-to-Peer lending operators will benefit from a 5 year tax holiday on the condition that they become operational before the 31st of December 2020.

These measures are in line with the government’s vision to position Mauritius as a hub for innovation-driven activities.

Taxation of banks

  • Income derived by banks from Global Business Companies will not be subject to the levy under the Value Added Tax Act 1998.
  • Banking institutions with an operating income more than 1.2 billion MUR per year will attract a levy of 4.5% on their operating income. This levy will not be categorised as a deductible expense under corporate tax and no foreign tax credit will be allowed.
  • Banks which offer a minimum of 5% of their new banking facilities to SMEs in Mauritius, to companies operating in agricultural, manufacturing or production of renewable energy in Mauritius or to operators in African or Asian countries will be able to enjoy a tax rate of 5% on its chargeable income in excess of its chargeable income in the base year (2017/2018).

Carry Forward of Unrelieved Tax losses

The government further announced that a company will not be able to carry forward its accumulated losses if there is a change in the ownership of the company. However, in the case of a manufacturing company, the latter will be allowed to do so if the appropriate Minister deems that it is in the public interest to do so. This is subject to the fulfilment of conditions related to safeguard of employment. It should be noted that the above recommendations were announced by the current Prime Minister, Minister of Home Affairs, External Communications and National Development Unit and Minister of Finance and Economic Development as part of the 2019/2010 tax changes. However, the Budget proposals may be significantly amended before enactment. As such, do not hesitate to consult us if you wish to determine a specific investment strategy related to specific circumstances.

Now, a non-resident of Mauritius wishing to establish a business in Mauritius must apply for a Global Business Licence (GBL).

Following the Mauritius Budget Speech 2018-2019, the Finance act was amended to abolish Global Business Category 1 and 2 (GBC1, GBC2) Licences. This is part of reforms undertaken by the government to increase the country’s competiveness and transparency as a global financial centre. Now, a non-resident of Mauritius wishing to establish a business in Mauritius must apply for a Global Business Licence.

What is a Global Business Licence?

The Global Business Licence (GBL) regime has been implemented to replace GBC1. It states that a resident corporation held or controlled by a person who is not a citizen of Mauritius and that is running or proposing to run one principally outside Mauritius will need to apply for a GBL. However, its issuance will depend on certain requirements. These are:

  • The company’s core income-generating activities must be carried out in or from Mauritius,
  • It is required to employ, directly or indirectly, a reasonable number of qualified persons to conduct its core activities,
  • It should have a minimum level of expenditure which is proportionate to its level of activities,
  • It must be managed and controlled in Mauritius and
  • It should be administered by a management company.

Factors considered by the FSC

In line with provisions which have already been established, when determining management and control of a company, the Financial Services Commission (FSC) will take into consideration the following points:

  • Will the GBL have a minimum of two directors who are residents of Mauritius and have enough capability to exercise independence of mind and judgement,
  • Will the GBL maintain its principal bank account in Mauritius at all times,
  • Will the GBL prepare statutory financial statements and will cause said financial statements to be audited in Mauritius and
  • Will the GBL provide for meetings of directors to include at least two directors from Mauritius?

The assessments carried out by the FSC will depend on case-to-case basis and they will take into account the specific circumstances of each GBL.

Changes brought to the new tax regime

The introduction of GBL brought several changes to the country’s tax regime. Previously a GBC 1 was subject to a presumption that the amount of foreign tax charged on its foreign source income was equal to 80% of the Mauritius tax chargeable with respect to that income (‘Deemed Foreign Tax Credit’). This Deemed Foreign Tax Credit has now been abolished. In its place, a partial exemption regime has been implemented. The latter advocates that an income tax exemption of 80% on the following categories of income is applicable on the condition that the enhanced substance requirements are met.

  • Foreign source dividend provided that it has not been allowed as a deduction in the source country,
  • Foreign source interest income,
  • Profit attributable to a permanent establishment which a resident company has in a foreign country,
  • Income derived by a collective investment scheme (CIS), closed end fund, CIS manager, CIS administrator, investment adviser or asset manager and
  • Income derived by companies engaged in ship and aircraft leasing.

Nonetheless, GBL companies can still claim credit for actual foreign tax incurred.

If you are looking for a management company that will help you set up a GBL in Mauritius, do not hesitate to get in touch with us.