Mauritius - a stepping stone to sub-Saharan Africa

December 2016

Mauritius sits in the Indian Ocean around 2000 kilometres off the south-east coast of Africa.

It has a history of colonisation, being at one time or another under Dutch, French and British control. Achieving independence from the British Crown in 1968, and becoming a full republic in 1992, Mauritius has grown to a population of 1.3 million people who are equally fluent in French and English.

The Mauritian political and legal systems offer a reminder of its colonial past: a democracy modelled on Westminster and a legal system influenced by French civil law and British common law.

Nowadays, Mauritius is recognised internationally for its multi-cultural harmony, social cohesion, rule of law, security, and political and economic stability.

Economy

The annual GDP growth rate of Mauritius has been increasing constantly over the past three years to reach 5.5% in 2016, making it one of the fastest-growing economies in sub-Saharan Africa.

Once solely agricultural, Mauritius has since evolved a diversified economy made up of manufacturing, tourism, IT and financial services.

The financial services sector remains one of the most important drivers of the Mauritian economy, representing 10% of GDP and directly employing over 15,000 highly skilled professionals.

For the future, the Mauritian government is acknowledging the country's island status by developing an ocean economy. This reform of the economic structure and careful fiscal management means Mauritius offers the best environment for doing business in sub-Saharan Africa.

Mauritius as a financial hub

The Mauritian government has shown ambition and innovation in creating a financial gateway into Africa.

Mauritius has based its law and regulation on what works elsewhere in the world and now its financial services industry is mature and well-respected, with many global names such as HSBC, Barclays and Deutsche Bank having bases on the island.

This legal framework - added to an attractive low-tax environment and network of double-taxation agreements, a well-developed communications infrastructure, and skilled human resources - confirms the reputation of Mauritius as a financial centre.

Initiatives to attract investors

Mauritius is on a continual drive to attract investors. To help this, the government has developed a culture and environment that makes it easy to do business here.

• Business-friendly environment - it's easy to operate from Mauritius in as little as three days.
• Simple, low-tax regime - corporate, branch and personal taxes all at 15% and zero withholding and capital taxes.
• Carry forward of losses limited to five years except for losses attributable to annual allowances.
• Royalties, interest and service fees payable to foreign affiliates are allowable as expenses provided they are reasonable and correspond to actual expenses incurred.
• No foreign exchange control.
• Presence of international banks and audit firms.
• No estate duty, inheritance or wealth taxes, no stamp duties, registration duties or levy.
• Zero-rated Value Added Tax for global business transactions.
• Trusts can elect to be non-resident and be tax-exempt in Mauritius.
• Work and live programme - this enables a non-resident to work and live here for up to three years, and is renewable subject to certain conditions.
• Mauritius offers pleasant and peaceful working and living conditions with a unique lifestyle in a blend of cultures.

Mauritius - the tried-and-tested jurisdiction

Mauritius has proved itself already as a top source of foreign direct investment into India. This success means Mauritius has now positioned itself as the jurisdiction of choice for those looking to structure their investments in the rapidly emerging African market.

As well as its international network of 43 double-taxation treaties, Mauritius has signed treaties with no fewer than 17 African nations as well as Investment Promotion and Protection Agreements (IPPAs) with several African countries. These IPPAs provide additional comfort to investors since they significantly reduce investment risks in those countries where there may exist some risk of nationalisation or expropriation.

Global Business Companies

Global Business Companies (GBCs) are licensed by the Mauritian authorities to conduct business with non-residents in foreign currencies. GBCs enable investors to structure themselves efficiently. There are two types: GBC1 and GBC2.

• GBC1 is used by companies offering investments and other financial activities and products.
• GBC2 is for companies carrying out business activities other than financial services.

A GBC can structure itself in various forms. Examples include: trusts, foundations, global funds, limited partnerships, and protected cell companies.

In 2016, the Mauritian government announced new measures to boost the development of the financial services sector, including tax holidays for GBCs incorporated on or after 1 September 2016.

Why Mauritius?

There are many reasons why experts consider Mauritius a good place for overseas investment, not least its strategic position in the Indian Ocean and the fact it has largely modelled itself on proven international business practice.

Doing business in Mauritius is both smooth and easy and complies with best practices in terms of transparency, good governance and ethics.

In 2016 the World Bank ranked Mauritius 32nd out of 189 global countries, and 1st of 48 Sub-Saharan African countries for ease of doing business.

In the 2015-16 Global Competitiveness report, Mauritius achieved an overall ranking of 46 out of 140, in turn placing it 1st in Africa.

In the 2016 Ibrahim Index of African Governance (the most comprehensive collection of data on African governance) Mauritius was ranked top out of 54 countries.

Mauritius also tops the African continent on other key international benchmarks, namely the Heritage Foundation Index of Economic Freedom, the Forbes Survey of Best Countries for Business, the Democracy Index and the Environmental Performance Index, amongst others.

This is all evidence of how Mauritius has raised its game to compete internationally with the best.

Mauritius clearly offers many benefits as an international business centre. However, if you are interested in Mauritius as a place to invest, make certain you seek the advice of an expert.