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By Gavin Butchart*
More and more South Africans are eyeing property investment and relocation to Mauritius as the island continues to introduce changes to make it an attractive investment and residence choice, against the backdrop of the collapse of property investments on home soil.
Mauritius started to relax restrictions with a phased approach and opened its borders last week to vaccinated travellers (for now, excluding South Africans) and will open further from October 2021 to fully vaccinated travellers, subject to a negative PCR test 72 hours prior to boarding, welcoming holiday makers, residents, investors and travellers back to the island.
Unlike the local market, where property values have largely stagnated and declined in many regions, in 2018 property prices in Mauritius were 133% higher than in 2010 and continue to grow.
The recent 2021/2022 annual budget presented by Dr. the Hon. Renganaden Padayachy, Minister of Finance, Economic Planning and Development in June 2021 also seems to support the move to relaxing the entry for foreigners and their families to the island with the Economic Development Board (EDB) calling this budget “Better Together” and could potentially open a whole new world for Mauritius and foreign investors.
Below are some of the highlights from the recent budget speech.
Gross Direct Investment (Inflows) for 2019 stood at Rs 21 billion while for the first 3 quarters of 2020 (Jan-Sept) were Rs 9 billion, contributing largely towards Real Estate Activities and Financial & Insurance Activities. In terms of markets, France and South Africa represent the main sources of foreign direct investment flows, ensued by USA, UK, Switzerland, UAE, and India.
Mauritius lost 17.9 percentage points of GDP growth, contracting by 14.9% in 2020. International projection for the country is optimistic, with strong recovery anticipated in the medium term. The African Economic Outlook, issued in March 2021, projects GDP growth to stand at an average of 7.1% for the next two years while the IMF WEO issued in April 2021, estimates a growth rate of 6.6% for the year 2021.
Despite facing a depreciation of the rupee, the headline inflation rate for the year ended 2020 stood at 2.5% with a Consumer Price Index of 106.1 in December 2020, while headline inflation for the 12-months ending May 2021 worked out to 1.8%. The IMF WEO, issued in April 2021, expects to resume an upward trend for inflation rate at 2.6% in 2021.
A new strategy will be adopted whereby Mauritius is seeking to attract new talents through amending the various permits on offer to foreigners in association with the EDB and MTPA to achieve that Mauritius is the preferred destination for retirees and long term stay tourism.
The challenge that Mauritius is currently facing is a no growth population the last few years with fertility rate of 1.4% and an aging population. This has resulted in a gap in the workforce and the country has no other choice to open skills and market force to foreign nationals in order to invest, work and live in Mauritius. There are currently around 6,400 active occupation permit and residence permit holders in Mauritius, representing only 4% of the resident population as compared to Singapore (37%), New Zealand (22%) and Luxemburg (47%).
Below are some proposed changes to the immigration laws of Mauritius which makes it a lot more attractive to attract new talent, new investors to start/continue life in Mauritius.
Occupation Permit Holders
|OP was valid for 3 years (renewable)||Extension validity period for Professionals from 3 years to 10 years.|
|Same was proposed in Budget 2020/21||Exemption from the application of an OP or work permit for Spouses of OP holders investing or working in Mauritius.|
|New Proposal – Current restriction is aged 24||Waiving of the maximum age limit of 24 years for dependents.|
|New Proposal||the 10-Year Family Occupation Permit
for those contributing USD 250,000 to the COVID-19 Projects Development Fund.
|New Proposal||Setting up of a privilege club scheme (privilege access to hotels, golf courses, restaurants, private medical institutions, amongst others).|
|New Proposal||Non– citizens holding an Occupation Permit as a Professional will be given the flexibility to switch job without having to submit a new application provided the minimum criteria are met.|
|New Proposal||Non-citizens holding an OP as self-employed will be allowed to incorporate a one-man company and employ administrative staff.|
|New Proposal||The requirement for OP applicants to arrive in Mauritius on a business visa to be issued with a permit to be waived.|
|New Proposal||A non-citizen who purchases or otherwise acquires an apartment used, or available for use, as residence, in a building of at least 2 floors above ground floor, provided the purchase price is not less than USD.
375,000 will be issued with a residence permit, including for his dependents, and exempted from the requirement of a work or occupation permit.
|Permanent Residence Permit||Current||Proposed|
|New Proposal||Holders of a 10-Year Permanent Residence Permit will have the validity automatically extended to cover a 20-Year period.|
|New Proposal||Holders of a Permanent Residence Permit will be able to renew their permits and they will be given the flexibility to switch category between investor, professional and retired.|
|Young Professional Permit||Current||Proposed|
|New Proposal||International students enrolled in a recognised educational institution in Mauritius will
benefit automatically from:
§ A 20 hours per week work permit.
§ A 10-Year renewable Young Professional Occupation Permit upon graduation.
|Foundations & Trusts||Current||Proposed|
|Extension||The Income Tax Act will be amended to ensure that foundations and trusts benefitting from a preferential tax regime comply with the OECD standards, including substantial activity requirements.|
|Tax Holiday Asset/Fund Manager||Current||Proposed|
|Extension||Holders of a certificate issued on or after 1 September 2016 will be exempted from tax on their emoluments for an additional 5 years while new certificate holders will be eligible to a tax holiday of 10 years.|
|New Proposal||In addition, the threshold of USD 100 million in respect of asset base being managed by an Asset/Fund Manager will be reduced to USD 50 million.|
|New Proposal||Construction of purpose-built factories for pharmaceutical and medical device
manufacturing and clinical and preclinical trials:
§ Exemption from registration duty and land transfer tax.
§ Exemption for Land Conversion tax.
§ Exemption on VAT on construction.
Premium Investor Certificate for the manufacture of pharmaceuticals and medical devices to all companies.
Full tax credit on the costs of acquisition of patents for Biotechnology and Pharmaceutical companies.
Companies engaged in the medical, biotechnology and pharmaceutical sector will be taxed at 3% instead of 15%.
|Clarity on Premium Visa||Non-citizens of Mauritius holding a Premium Visa doing remote work from Mauritius and have been in Mauritius for 183 days or more will be taxed at 15% in Mauritius only if the income has been remitted to a bank account in Mauritius. Should the income exceed Rs 3 million in a tax year an additional Individual Solidarity levy will apply of 10% to 25%, over and above the 15% unless a declaration is made by the holder of the Visa that income was taxed at source|
Brenthurst Wealth has partnered with well-established developers in Mauritius, offering attractive commercial and residential projects specifically for South Africans looking to invest in property sector with no fear of land expropriation and a great quality of life. The Brenthurst subsidiary in Mauritius, Brent Wealth, office offers a comprehensive investment service and can assist with permits, company structures and property investment.
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