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🇲🇺 Mauritius

What should I know when moving to or investing in Mauritius? ​

Nozipho Tshabalala speaks with Investec's Rene van Zyl and Gordan Stuart, MD of Accuro.

If you dream of working and living in Mauritius, or you’re considering investing there, a wide range of options is available. But before you jump on a plane, there is more to island life than cocktails and white beaches.

High cost of living​

Food, property and cars in Mauritius are expensive. In addition, expats are treated differently from citizens:

  • They pay higher school fees than citizens at the same school
  • They are restricted to buying property in designated schemes, which is pricey
  • They are taxed differently.

Mauritius as a tax haven?​

Mauritius is not the low-tax jurisdiction it once was. It is highly regulated, participating in both the Common Reporting Standards and the Foreign Account Tax Compliance Act.

The personal tax rate used to be an enviable 15%, but expats are now subject to a 25% solidarity levy on a salary of more than Rs3 million (about R1.2 million). You also pay 3% of your salary to a pension scheme that only citizens can access. On the plus side, you don’t pay capital gains tax (CGT), donations tax or estate duty tax.

Applying to work and live in Mauritius​

To become a permanent resident, you can buy property in one of the available residential property schemes (with a minimum investment of US$350 000). They include the:

  • Property Development Scheme
  • Real Estate Scheme
  • Integrated Resort Scheme
  • Smart City Scheme.

You can also apply for a residence permit. There are four categories, each with its own qualifying criteria:

  • Professional occupancy permit (valid for three years)
  • Investor occupancy permit (10 years)
  • Self-employed permit (10 years)
  • Retirement residency permit (10 years).

Tax implications from an SA perspective​

Buying into a residency programme in Mauritius does not automatically mean you stop being an SA tax resident. Taxes also have to be paid in Mauritius.

SA taxes apply if you are ordinarily resident in South Africa. If you become an exclusive resident in Mauritius, you might get some relief through the double tax agreement between the two countries. But the three-year professional residency permit, for example, might not be long enough for SA to consider you an exclusive resident of Mauritius.

There are specific steps to follow if you want to give up your SA tax residence and it’s advisable to seek independent advice about what it means for you and your family.

Ceasing to be a SA tax resident, for example, triggers an exit charge based on the value of your worldwide assets.

The permanence of your relocation is a crucial factor in taxation and exchange control. So you must think carefully about whether you can live in Mauritius permanently before you take the plunge.

Estate planning​

There’s no estate duty, but Mauritian law does reserve between 50% and 75% of the estate for the children of the deceased, and no other provisions in the will can encroach on this portion.

To avoid forced heirship, you can buy the property in trust. A trust can be administered in Mauritius, but still established using, for example, Guernsey law.

Your heirs in SA will avoid estate duty and (capital gains tax)[https://www.developersfinance.guide/docs/glossary-intro#captial-gains-tax] and get the benefit of permanent residency.

The trust also gets around the fact that Mauritian law does not recognise a joint or mutual will nor allow heirs as appointed executors.

Doing business in Mauritius​

Investing in Mauritius has a lot to recommend it.

  • There are no:
    • Exchange controls
    • Dividend-withholding taxes
    • Capital gain tax
    • Estate duty taxes
  • The island is well-located, being only four hours from SA and close to other jurisdictions.
  • It enjoys economic and political stability
  • The country is highly regulated, which means a lot of paperwork but also peace of mind
  • There’s an abundance of support companies, such as accountants, at a very reasonable cost
  • Infrastructure includes:
    • A good banking system
    • High-speed internet
    • Highly skilled staff and service providers.