Mauritius is widely recognized and internationally acclaimed as the foremost investment gateway into Africa. The country is the eastern-most part of Africa and is a member of the African Union and other economic blocs. Its prime location in the Indian Ocean, coupled with a buoyant financial system and a safe and secure system of law makes it an ideal base for companies investing in Africa. As rightly described by the former CEO of the Financial Services Commission and now Governor of the Bank of Mauritius, Mr. Harvesh Seegolam – "Mauritius ticks all the boxes".
Our previous article on Mauritius being the preferred platform for doing business in Africa can be consulted here.
How does Mauritius stand out from other offshore hubs such as the UAE and the BVI, amongst others?
Mauritius is much more than just an offshore hub.
Firstly, Mauritius is a secure and transparent country with a wide network of economic ties. It has nurtured close trade and investment ties with various countries and is extending its ties across the African continent. It is an important regional player through its membership of trading and cooperation organizations like the Southern African Development Community, the Common Market for Eastern and Southern Africa (COMESA), the Indian Ocean Commission, the Indian Ocean Rim Association, African Growth and Opportunity Act, and an interim economic partnership agreement (EPA) with the European Union. Furthermore, it has struck a free trade agreement (FTA) with Turkey and a preferential trade agreement (PTA) with Pakistan.
Secondly, Mauritius has a very generous double taxation relief system – foreign tax credits are not subject to a limitation and can be set off against other taxable foreign income in the same year. Also, where foreign dividends are earned, the Mauritian recipient can claim credit not only in respect of the withholding tax suffered but also on the corporate tax suffered on the profits out of which the dividends were paid. This is particularly relevant for Mauritian companies holding African subsidiaries, which are almost always subject to high tax. This can often lead to 0% tax payable in Mauritius. The country has concluded tax treaties with 45 countries, including South Africa. A list of all countries with which Mauritius has concluded a Double Taxation Avoidance Agreement can be consulted on the website of the Mauritius Revenue Authority here.
Moreover, where capital gains tax ranges from 30-35% in some African countries, the Double Taxation Agreements in force in Mauritius restricts taxing rights of capital gains to the country of the seller of the assets, i.e to Mauritius itself for a Global Business Company registered in the country. Since there is no capital gains tax in Mauritius, the potential tax savings for a Mauritius registered company are significant.
Thirdly, the Mauritian Economic Development Board (EDB) has recently been keen to position Mauritius itself as a manufacturing hub by offering various investment incentives for companies and export-oriented businesses. Some of those incentives include:
- An effective tax rate of 3% on profits derived from export of goods;
- No import duties on equipment and raw materials;
- VAT on raw materials is payable at customs clearance but reimbursable on exports;
- Industrial electricity tariffs for manufacturing activities;
- An 8-year tax holiday for companies engages in the manufacturing of pharmaceutical products, medical devices and high-tech products.
- Other activities eligible for an 8-year tax holiday in Mauritius include regional headquarters, investment under a smart city scheme and more recently, newly incorporated freeport operators or developers.
Also, Mauritius offers foreign investors a welcoming place for residency -its pleasant temperatures, incredible tropical environment, hospitable and bilingual population, as well as the high-end health and education services are attractive features of this destination, offering an ideal setting to invest, live or retire. After all, the celebrated American author Mark Twain once said: "Mauritius was made first, and then heaven; and heaven was copied after Mauritius".
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