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Mauritius:
breaking the shackles
Since introducing far-reaching tax and regulatory reforms at the start of 2019, Mauritius is fast becoming an offshore financial hub of substance. The European Union (EU) has removed the island country from its tax haven ‘grey list’, and it has enjoyed a meteoric rise in ranking in the World Bank’s annual ‘ease of doing business’ report.
Sanlam Trustees International has since 2011 become established as one of the leading trust and corporate services companies in Mauritius. We offer independent trust and company management services to private, corporate and institutional clients around the world.
Why Mauritius? Despite past criticism of the country’s tax regime and so-called financial secrecy, the Mauritian government is committed to maintaining and growing its reputation as a financial centre of substance, and has introduced sweeping reforms to enhance its competitiveness and transparency. Furthermore, Mauritius is a stable democracy, with a well-developed, respected legal and regulatory framework.
In 2017 and 2018, both the EU and the Organisation for Economic Co-operation and Development (OECD) expressed concern about the regimes of a number of tax havens, including Mauritius. In particular, they labelled this country’s deemed foreign tax credit of Category 1 Global Business Companies and the tax regime for ‘less transparent’ Category 2 Global Business Companies as ‘potentially harmful’ tax practices. Mauritius was placed on the EU’s ‘grey list’ of tax havens in December 2017 (the grey list is for countries that have been put on notice but haven’t yet been blacklisted as they’ve committed to major regime reforms).
Since then, Mauritius has been working hard to find a way to ensure the global business sector falls in line with EU and OECD requirements, and to boost its image as a transparent and compliant jurisdiction while still retaining a competitive advantage. The country’s new global business regime was announced in 2018 and came into effect at the start of 2019.
The result is that on 10 October 2019, Mauritius was removed from the EU’s tax haven grey list – along with Switzerland, Albania, Costa Rica and Serbia – which means the EU is comfortable that Mauritius has delivered on its commitments. For the island country, this is a huge reputational boost. There’s now no reason why any financial institution or enterprise should refuse to do business with a Mauritian company.
Mauritius has been climbing the rankings in the World Bank’s annual ‘ease of doing business’ report, now ranking 13th out of 190 economies. The rise has been meteoric – while 2016 saw Mauritius in 49th place, by 2017 it was ranked 25th, and by 2018 it had climbed to 20th. To place this significant achievement in context: Australia is ranked just behind Mauritius in 14th place, with Germany taking the 22nd spot. The next African country on the list is Rwanda at 38, with South Africa languishing at 84 for various reasons, not least of which is this country’s power supply issues.
To obtain a rating, the World Bank looks at 10 indicators that measure the ease of doing things across the life cycle of a business, including opening a business, obtaining funding, finding premises, and operating in a secure business environment.
In our view, the major changes initiated by the Mauritian government reflect its ongoing commitment to improvement and modernisation of the economy as a whole, while keeping the country compliant with OECD and EU regulatory requirements. We believe Mauritius is fast becoming the jurisdiction of choice for offshore tax structures and estate planning, and as a wealth management centre that is truly the ‘gateway to Africa’.
For further information about offshore trust and corporate services, please contact Nick Jeffrey at nickj@privatewealth.sanlam.co.za
The formation and registration of trusts, and the provision of independent trusteeships – both local and offshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
Expert advice is crucial in dealing with cross-border estate and tax planning.
Stanley Broun has spent 10 years in Fiduciary And Tax.
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