Presentation Notes - BTG Management Services (Mauritius)

Report
Business Through Mauritius
Practical Aspects of Setting-up and Operating a Business from the Mauritius
Financial Centre
Introduction & Presentation Overview
 Problems Facing the South African Businesses
 How Business Achieve Growth in New (Frontier) Markets
 How Mauritius as a Financial Centre Adds Value?
 Stacking-up Mauritius as a Base for Businesses
 Practical Example –Family Business using Mauritius for Commercial Property
Purchase
 Practical Example – Business Group Investing in Africa via Mauritius
 Key Risk Management - Legal, Tax and Exchange Controls
 Conclusion
Problems Facing the South African
Businesses
 Cross-border business - structural Impediments
 Business competitiveness
 Regulatory or exchange control “red-tape”
 Legal constraints
How Businesses Achieve Growth in
New (Frontier) Markets?
Family Businesses
 Investment on global markets
 Exposure to foreign currency and
assets
Corporate
 Product/service expansion or
geographic market expansion
beyond national borders
 Estate and succession planning
 Centralising functions and risks on
regional basis
 Asset protection
 New tax opportunities and risks
 Aligning current tax strategy and
planning with corporate expansion
strategy and planning
 Legal planning –entity, contracts,
host country laws
How Mauritius as a Financial Centre
Adds Value?
 Favourable time-zone
 free choice of functional currency
 Stable political, investment and
banking environment
 open stock exchange
 Attractive fiscal policies
 Double Taxation Avoidance Treaties
 No exchange controls
 Administrative ease of doing
business
 no tax on dividends, interest or
royalty income and no withholding
taxes
 low or no income tax, no stamp
duties and no capital gains tax
 reliable infrastructure
 availability of qualified labour force
 open policies for expatriate
professionals
 enabling laws allowing for access to
key region economic blocs, tax
treaties and investment promotion
treaties to reduce withholding
taxes, customs duties and taxes on
capital
 well established company and
corporate law
Stacking-up Mauritius as a Base for
Businesses
 Top Ranking in Africa on Global Benchmark Indices
 Closest recognised International Financial Centre to Africa
 Well-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
Stacking-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.
Stacking-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.
Wide Tax Treaty Network
Africa
Ratifying
Congo
Egypt
Gabon
Nigeria
Signing
Ghana
Negotiating
Algeria
Burkina Faso
Lesotho
Malawi
Tanzania
Morocco
In force
Botswana
Kenya
Lesotho
Madagascar
Mozambique
Namibia
Rwanda
Senegal
Seychelles
South Africa
Swaziland
Tunisia
Uganda
Zimbabwe
Zambia
Tax Treaties of Other IFC’s Comparison
IFC
Number of tax treaties with Africa
South Africa (not IFC)
21
Mauritius
15
Netherlands
10
UAE
6
Botswana
(not IFC)
5
Switzerland
5
Seychelles
4
Malta
4
Singapore
2
British Virgin Islands
0
Isle of Mann, Jersey & Guernsey
0
Presence of Global Banking
Proximity to Market
Practical 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
GBC1

The 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
South Africa

0% - 3% tax at Mauritius GBC1 level with no
withholding taxes on dividends to the
foundation.

Foundation is tax exempt

Repayment
taxable.
of
loans
by
to re-invest into
Foundation
not
Practical 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 personnel

Depending 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
Key Risk Management – Legal, Tax and
Exchange Control
 Legal
 Tax
 Tax avoidance
 Transfer pricing
 Controlled foreign company
 Attribution of profits
 Exchange Controls
Conclusions
Thank You & Contact
BTG Management Services
(Mauritius) Limited
1st Floor, Building. B, Nautica
Commercial Centre
Royal Road, Black River, Mauritius
Tel: +230 483 1212
Fax: +230 483 1313
E-mail: [email protected]
Boris Pelegrin
[email protected]

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