Presentation on theme: "Business Through Mauritius"— Presentation transcript:
1Business Through Mauritius Practical Aspects of Setting-up and Operating a Business from the Mauritius Financial Centre
2Introduction & Presentation Overview Problems Facing the South African BusinessesHow Business Achieve Growth in New (Frontier) MarketsHow Mauritius as a Financial Centre Adds Value?Stacking-up Mauritius as a Base for BusinessesPractical Example –Family Business using Mauritius for Commercial Property PurchasePractical Example – Business Group Investing in Africa via MauritiusKey Risk Management - Legal, Tax and Exchange ControlsConclusion
3Problems Facing the South African Businesses Cross-border business - structural ImpedimentsBusiness competitivenessRegulatory or exchange control “red-tape”Legal constraints
4How Businesses Achieve Growth in New (Frontier) Markets? Family BusinessesCorporateInvestment on global marketsExposure to foreign currency and assetsEstate and succession planningAsset protectionProduct/service expansion or geographic market expansion beyond national bordersCentralising functions and risks on regional basisNew tax opportunities and risksAligning current tax strategy and planning with corporate expansion strategy and planningLegal planning –entity, contracts, host country laws
5How Mauritius as a Financial Centre Adds Value? Favourable time-zoneStable political, investment and banking environmentAttractive fiscal policiesDouble Taxation Avoidance TreatiesNo exchange controlsAdministrative ease of doing businessno tax on dividends, interest or royalty income and no withholding taxeslow or no income tax, no stamp duties and no capital gains taxfree choice of functional currencyopen stock exchangereliable infrastructureavailability of qualified labour forceopen policies for expatriate professionalsenabling laws allowing for access to key region economic blocs, tax treaties and investment promotion treaties to reduce withholding taxes, customs duties and taxes on capitalwell established company and corporate law
6Stacking-up Mauritius as a Base for Businesses Top Ranking in Africa on Global Benchmark IndicesClosest recognised International Financial Centre to AfricaWell-regulated business jurisdiction - international standards and best practice.Close cultural and commercial ties with Africa, Europe, India and China, from which its diverse population hails.Signatory to major African conventions and a member of major African regional organisations - preferential access to African markets.A treaty‐based jurisdiction
7Stacking-up Mauritius as a Base for Businesses (cont.) Investment Promotion and Protection Agreements (IPPAs) with a number of African countries (six of which are in force - Burundi, Madagascar, Mozambique, Senegal, South Africa and Tanzania) which provide, amongst other things, for free repatriation of investment capital and returns, guarantee against expropriation, most favoured nation rule with respect to treatment of investment, and compensation for losses in case of armed conflict.Economic, political and banking stability.Good international telecommunication service.An abundance of professional service providers at a relatively low cost.An educated and multilingual workforce, with English and French being the main business languages.
8Stacking-up Mauritius as a Base for Businesses (cont.) Hybrid legal system consisting of British common law practice and the French Napoleonic Code. The Privy Council of the United Kingdom is the final court of appeal.Modern and flexible company and commercial legislation which is essentially based on British common law.The Financial Services Commission of Mauritius oversees the regulation of the non-banking financial services industry.Mauritius is not part of continental Africa. This limits spill-over effects of any potential neighbouring conflicts which are prevalent in certain regions in Africa.Offers a wide variety of vehicles that may be adapted to maximise African investment opportunities, including limited partnerships (of particular interest in the private equity context), protected cell companies, trusts and foundations.
10Tax Treaties of Other IFC’s Comparison Number of tax treaties with AfricaSouth Africa (not IFC)21Mauritius15Netherlands10UAE6Botswana (not IFC)5SwitzerlandSeychelles4MaltaSingapore2British Virgin IslandsIsle of Mann, Jersey & Guernsey
13Practical Example – Family Property Business (South Africa) A South African family establishes a Mauritian Foundation and a Category 1 Global Business License Company (GBC1) holding company.The family capitalises the foundation with loans at interest.The Foundation injects debt and equity in a GBC1The GBC1 acquires commercial property and earns rental income.Depending on location of investments in a treaty jurisdiction, withholding tax on dividends and interest can be ultimately reduced to between 0%-15%.Structure cannot be used to re-invest into South Africa0% - 3% tax at Mauritius GBC1 level with no withholding taxes on dividends to the foundation.Foundation is tax exemptRepayment of loans by Foundation not taxable.
14Practical Example – Corporate Group (South Africa) A South African business (parent) establishes a Mauritius regional holding company.Mauritius regional holding company acquires multiple subsidiaries in the Southern Africa and engages directly in investment, financing and/or licensing activities.Open Mauritian offices and hire local and ex-patriate personnelDepending on location of subsidiary in a treaty jurisdiction, withholding tax on dividends, interest and royalties can be ultimately reduced to between 0%-15%.0% - 3% tax at Mauritius company level with no withholding taxes on dividends to the ultimate parent.No capital gains on exit at subsidiary company level.Exempt dividends repatriated to South African parent
15Key Risk Management – Legal, Tax and Exchange Control Tax avoidanceTransfer pricingControlled foreign companyAttribution of profitsExchange Controls