Insights - Mauritius : A Gateway to Africa

June 30th, 2018

According to 2012 IMF forecasts, Africa will be home to seven of the ten fastest growing economies in the world until 2017, and it is likely that the average African economy will take the lead from Asia.

Economic expansion in this region, particularly in Sub-Saharan Africa, is being supported by minerals and energy mainly, but also by a broad base of sectors including agriculture, technology, telecommunications, media and financial services. These industries are attracting significant foreign direct investments, a large portion of which is coming through private equity investments. Flows of foreign direct investment to Africa have been increasing significantly during the last decade and Mauritius has a vital role to play in this respect. Mauritius is regarded as the number one jurisdiction for investment into Africa.

The jurisdiction combines the traditional advantages of an offshore financial centre (no capital gains tax, no withholding tax, no exchange controls and free repatriation of profits and capital etc.) with the distinct advantages of an extensive network of treaties and double taxation avoidance agreements.

Capital Gains tax, where imposed in Africa, are generally levied at a rate ranging from 30-35%. However, the Double Taxation Agreements in force in Mauritius restricts taxing rights of capital gains to the country of the seller of the assets. Since there is no capital gains tax in Mauritius, the potential tax savings for a Mauritius registered company are significant.

Furthermore, the majority of African states impose some withholding tax on dividends paid out to non-residents. These vary between 10% and 20%. The DTAs in force in Mauritius limit withholding taxes on dividend. The treaty rates are generally 0%, 5% or 10% thereby creating potential tax savings depending on the investee country. With respect to capital gains tax, the DTAs guarantee the maximum withholding tax rate should changes occur in the fiscal policy in the countries on investment.

Over the last 12 years, we have contributed to the economic and financial prosperity of a large number of individuals and companies holding assets in Africa which has earned us a strong reputation as a trusted and professional service provider. We are proud of the service we offer. And we are proud of our people who make it happen.

Finance Act 2018

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