For a long time Mauritius has been perceived as the country of choice to facilitate entry into Africa, but the fact remains that Mauritius has made a lot of changes recently, not all of them positive, and so it is worth examining whether that is still the case or not.
Factors in Mauritius favour:
A lot of factors still favour Mauritius as a holding company location for investment into Africa. These include:
No exchange controls;
No Capital Gains Tax;
No Withholding Tax on dividends leaving Mauritius;
No Inheritance Tax (a big factor for retirees);
Good banking system;
Extremely easy system of obtaining residence permits for executives moving there;
Although there is a flat rate of tax at 15% (which complies with new world wide initiatives) there is a tax rate of 3% on dividends and interest received;
Remittance base system of tax for individuals for non-employment income;
Several tax holidays which are easily applicable for groups which reduce the tax rate to 0%;
Relatively good transport links, although travel into Africa has to route via South Africa or Dubai and is not ideal;
Good IT infrastructure with island wide fibre and good local IT skills;
Great place to live.
Downsides to using Mauritius:
Some of the downsides to using Mauritius include the following:
Quite slow to incorporate new companies compared to locations elsewhere;
High personal taxes for executives locating there (up to 33%) when including the solidarity levy;
Inability to obtain a passport means that despite the lengthy permanent residence options available that families invariably have to relocate when children leave school;
Somewhat high corporate rate when compared to some competitors like Dubai, Hong Kong (with its source based system), Singapore or Ireland.
Above all else the Mauritius treaty network is held out as one of the main advantages of using Mauritius as a springboard into Africa. We show below a comparison between some of the main contenders. We note that Mauritius actually ranks second behind the UK for number of treaties with African countries but holds a clear lead above other rivals. The UK also offers a number of benefits that Mauritius does not. These include some of the following:
Audit exemption up to £10,2m turnover and less than 50 employees;
Speed of incorporation;
Travel routes are widespread;
Visa options that lead to a passport;
Resident non domiciled system of tax to new arrivals.
However, despite this competition, we are still of the view that Mauritius remains the preferred choice for investment into Africa. Not least of these are because of the 3% tax rate on dividend and interest income, superb lifestyle, and general feeling of connectivity with Africa. If a passport is really important to the executives in charge, then the UK may well prove the location of choice.
Tax Treaties in African Countries
|Countries||United Kingdom||United Arab Emirates||Seychelles||Mauritius||Botswana|
|Cabo Verde||Cabo Verde|
|Comoros Islands||Comoros Islands|
|Democratic Republic of Congo||Democratic Republic of Congo|
|Ivory Coast||Ivory Coast|
|Sierra Leone||Sierra Leone|
|South Africa||South Africa||South Africa||South Africa||South Africa||South Africa|
|Swaziland (Eswatini)||Swaziland (Eswatini)||Swaziland (Eswatini)||Swaziland (Eswatini)|