Why no inheritance tax is a good reason for investing in Mauritius
Whether you’re looking to start or develop a business or invest in property abroad, Mauritius is the ideal destination. In fact, the absence of inheritance tax makes it a great place for building up your assets. Let’s explore the implications of no inheritance tax and how foreign entrepreneurs and investors can benefit from it. What is Inheritance Tax? Inheritance tax, also referred to as estate tax or death duty, is a governmental tax imposed on the transfer of assets or wealth from a deceased individual to their beneficiaries. This tax is usually determined by the value of the inherited assets and can significantly vary between countries. In many instances, inheritance tax can impose a significant financial burden on foreigners, whether they are entrepreneurs or investors, reducing the overall amount of wealth that can be effectively passed on to future generations. The absence of Inheritance Tax in Mauritius Over the years, Mauritius has become an attractive destination for wealth preservation due to its unique advantage of not having an inheritance tax. Unlike numerous other countries, Mauritius does not impose any tax on the transfer of assets through inheritance. This advantageous feature enables individuals to smoothly transfer their wealth to their heirs or beneficiaries without incurring any tax liabilities. Consequently, Mauritius facilitates the seamless transition and preservation of wealth across generations. This is why, besides its favorable tax regime, Mauritius has gained prominence as an attractive destination for wealth preservation and succession planning. What are the benefits of no Inheritance Tax in Mauritius? A safe framework for High-Net-Worth-Individuals (HNWIs) The absence of inheritance tax makes Mauritius an attractive destination for foreign high-net-worth individuals (HNWIs) looking to safeguard and optimize their wealth management strategies. For instance, HNWIs can establish family offices or holding companies in Mauritius to consolidate and manage their assets while enjoying a range of tax benefits. Global wealth management With its global reputation as a wealth management and financial services hub, Mauritius has successfully positioned itself as an enticing destination for foreign investors and entrepreneurs. The absence of inheritance tax adds to its appeal, drawing individuals and families from across the globe who desire a secure and tax-efficient environment for their assets. Mauritius boasts a strong financial ecosystem that encompasses esteemed banks, asset management firms, and professional services providers. This comprehensive infrastructure caters to the diverse requirements of clients seeking exceptional wealth management services. Wealth preservation Mauritius presents itself as a favorable jurisdiction for foreign entrepreneurs and investors seeking to preserve and safeguard their wealth for the benefit of future generations. By implementing comprehensive estate planning strategies, including the establishment of trusts or foundations, they can ensure that their heirs receive the utmost advantage without the encumbrance of inheritance tax. Strategic succession planning Foreign investors can strategically plan the transfer of their assets to beneficiaries in Mauritius, benefiting from the absence of inheritance tax. For family businesses, this can involve the utilization of trusts, foundations, or other legal structures that offer flexibility and tax advantages. By establishing such structures, investors can minimize tax liabilities and ensure a seamless wealth transition to the next generation. Enhanced wealth mobility and global presence The lack of inheritance tax in Mauritius simplifies the movement of wealth on an international scale. Families with assets spread across different countries can utilize Mauritius as a hub for wealth management, taking advantage of its tax benefits and extensive network of double taxation avoidance agreements (DTAAs). This strategic approach enables them to optimize their global financial affairs while also minimizing tax obligations. Strategic domicile and residence planning Foreign investors may explore the option of establishing their domicile or residence in Mauritius to capitalize on its favorable tax benefits. Mauritius presents enticing residence and citizenship programs, including the Occupation Permit (OP), which can offer tax advantages for foreign entrepreneurs and investors who are keen on making the country their permanent home. Although Mauritius has emerged as a sought-after destination for global wealth management, providing individuals and families with the opportunity to secure their financial future and create a lasting impact for generations to come, it’s important to note that tax laws and regulations can be complex, and individual circumstances vary. Fortunately, Blue Azurite is here to assist you. To navigate these tax implications and successfully invest or develop your business in Mauritius, get in touch with our team.
Virtual Asset and Initial Token Offering Services Act 2021: Learn everything about VASP
As a previous article advanced, the Virtual Asset and Initial Token Offering Services (VAITOS) Act 2021 was enforced on the 7th of February 2022. This is part of the government’s efforts to facilitate the implementation and process of new technologies in Mauritius and to give investors, businesses and consumers the opportunity to leverage technological advancements in a safe and regulated environment. This new Act is going to cover and regulate the use and distribution of ‘Virtual Assets’ (VAs) and ‘Initial Token Offerings (‘ITOs’). For the purpose of this article, we are going to look at Virtual Assets. What is a Virtual Asset? According to the VAITOS act, a virtual asset is simply a digital representation of value. It can be electronically traded or transferred and used for payment or investment purposes. However, digital representation of fiat currencies and other financial assets under the authority of the Securities Act do not count as virtual assets. VASPs will be regulated by the Act One of the main operations regulated under the act is VASP – Virtual Asset Service Providers. A VASP denotes an individual that conducts the following operations (one or more) on behalf of another person, as his business activity. Exchanges between Virtual Assets and fiat currencies Exchanges between one or more forms of virtual assets Transfer of Virtual Assets Safekeeping of Virtual Assets or instruments enabling control over Virtual Assets Administration of Virtual Assets or instruments that authorise control over Virtual Assets Participating in and providing financial services related to an issuer’s offer and sale of a Virtual Asset. Types of licenses available under the VASP regime The VASP regime englobes several sub-categories of licences. These are Holders of Class M (Virtual Asset Broker-Dealer) licences. These enable the operation of activities such as exchanges between Virtual Assets and fiat currencies or exchanges between one or more forms of Virtual Assets. Class O relates to Virtual Asset Wallet Services. These are licences related to the transfer of Virtual Assets. Class R which is linked to Virtual Asset Custodian. Holders of this type of licence are responsible for safekeeping of virtual assets or instruments enabling control over virtual assets. Class I is a Virtual Asset Advisory Services licence is required for the participation in and provision of financial services related to an issuer’s offer and/or sale of Virtual Assets. Class S which is applicable to virtual asset exchanges. This is a centralised or decentralised virtual platform, in or out of Mauritius, that facilitates the exchange of Virtual Assets for fiat currency or other Virtual Assets for third parties in exchange of a fee, a commission or some other form of benefit. Holders of this type of licence can hold custody or control Virtual Asserts on behalf of their clients to facilitate exchanges. They can also purchase Virtual Assets from a seller when transactions, bids or offers are matched and sell them to a buyer. How to apply for a VASP licence? An application for a VASP licence must be made to the FSC, clearly specifying the relevant class or sub-category of licence applied for. To obtain a VASP licence, the applicant must fulfil the following criteria: It must be a duly registered company conducting business activities in or from Mauritius. The company must be directed and managed from Mauritius The company must a physical office in Mauritius It must ensure that each one of its controllers, beneficial owners, associates and officers are in compliance with the ‘fit and proper’ criteria of the FSC. To determine whether an applicant is directed and managed from Mauritius, the FSC will take into consideration several factors. Some of them might be: the location of strategy, risk management and operational decision making the location of executives responsible for the above-mentioned decision making the location the management team meets to discuss about and introduce policy decisions the location of board meetings the place of residence of officers, employees or directors. Continuing obligations of VASPs The requirements, with regards to the licences, mentioned in the Act can be compared to the licensing requirements under the Financial Services Act. One of its stipulations is that no shares or legal or beneficial interest in a licensee may be transferred to a person without the approval of the FSC if the transfer is less than 5%, the transfer does not result in a person holding more than 20% of the shares/ legal or beneficial interest, the transfer does not result in a change of control. Moreover, the following activities require the approval of the FSC issues of shares appointment of controllers, beneficial owners and officers of a licence modifying the scope of activities related to the VASP reorganising the legal structure of a VASP Mergers Change of name or change of an external auditor. Additionally, VASPs are financially obligated to maintain a minimum stated unimpaired capital. This depends on the class or subcategory of the licence. It should maintain a separate account from that of its clients and put in place proper record keeping, including keeping information on the originators and beneficiaries involved in any transfer of Vas. Every year, an annual audited financial statement must be filed to the FSC. Ensuring the protection of its clients, VASPs must put in place adequate systems and controls at all times when keeping Virtual Assets in their custody. This will prevent market abuse. VASPs must also ensure that an adequate amount of each type of virtual asset is maintained to meet its obligations towards its clients. Finally, an important measure that must not be forgotten is strict compliance with AML/CFT regulations and the setting up of sound and adequate measures to combat money laundering and the financing of terrorism.
Issuance of Corporate and Green Bonds in Mauritius
The guidelines by the FSC on the issuance of corporate and green bonds in Mauritius (effective 23rd December 2021), describes the practices and procedures to be adopted by issuers of corporate and green bonds. The guidelines should be read in conjunction with the provisions of the Securities Act 2005 (‘SA’), the Securities (Public Offers) Rules 2007, the Securities (Preferential Offer) Rules 2017 and any regulations, rules, circulars, notices that the Commission may issue from time to time and other applicable laws. Issuers’ Threshold The guidelines on the Issuance of corporate and green bonds in Mauritius will be applicable to all reporting issuers under the Securities Act, 2005 satisfying the requirements of issuance of corporate and green bonds guidelines and undertaking a minimum size issue of MUR 100 million or equivalent. The minimum size issue threshold of MUR 100 million or equivalent will not be applicable for issue of green bonds. Notwithstanding the above, issuers of green bonds instruments will still have to comply with the provisions of Issuance of corporate and green bonds guidelines. Corporate Bonds Overview of Corporate Bonds For purposes of the guidelines, corporate bonds have been defined as “debt instruments denoting the obligation of an issuer/company to satisfy a holder’s claim to capital repayment and interest (and/or any other commitments entered into by the issuer)”. Characteristics of a Corporate Bond Denominated in MUR, USD, Euros or in any other currency acceptable to the Commission; A tenure of more than one year (more than 365 days); Fixed term with principal and any accrued interest/returns payable at maturity; Fixed or variable rate of return rate; Interest/return/profit to be paid periodically on certain specified intervals from the issue date, except for zero-coupon corporate bonds without periodic distribution; and Excludes all government bonds. Methods of Issue of Corporate Bonds Public Offer – through the issue of a prospectus subject to the review and approval by the FSC, in line with the Securities Act, 2005 and the Securities (Public Offers) Rules 2007. Preferential Offer – An offer or issue of securities that is a private placement; An offer or issue of securities that is made only to sophisticated investors; An offer or issue of securities only to related corporations of the issuer of the securities. Eligible Issuers Requirements An eligible issuer of corporate and green bonds may be a reporting issuer under the Securities Act and duly registered with the Commission satisfying the following requirements: Details Requirements Net Assets MUR 100 million or its equivalent, at any point in time, not earlier than 18 months prior to the proposed issue of corporate bonds. Track Record The company has been in existence for at least three (3) years and has positive net profits after tax over the last twelve (12) months’ financial periods preceding the application for the issue.Debt/EBITDA for the last two financial periods preceding the issue maintained at a weighted average of 4 times or less. Credit History The company does not have a history of recurrent default/late payments based on its MCIB or any relevant reports at the time of issuance. Minimum Issue lot – Preferential Offer MUR 1 million Minimum Issue lot – Public Offer MUR 100,000 Yields on the corporate and green bonds Shall be rounded to 2 decimal points and prices shall be rounded to 3 decimal points Notice to the commission Not later than 10 days after the corporate or green bond offer ismade Tenor of Corporate bonds The corporate bonds shall be issued in maturities of more than 365 days. Trading Securities Exchange, Over the Counter (‘OTC’) on the secondary markets.Settlement for OTC trades of corporate and green bonds shall not exceed T+3. Buyback An issuer may buy back corporate or green bonds from current holders before maturity, subject to the approval of its Board of Directors.Buyback of a corporate or green bonds shall take place through the IPA.The buyback offer shall be extended to all investors in the corporate or green bonds issue. Transfers The corporate or green bonds shall be transferable.The issuer shall recognize the investor whose name is last registered in the books of the IPA. Green Bonds Overview of Green Bonds For purposes of the guidelines on the issuance of corporate and green bonds, a green bond is a debt instrument which facilitates capital-raising and investments into new and/or existing qualifying green projects which have environmental benefits and can mitigate risks associated with climate change. Proceeds from Green Proceeds The proceeds of green bonds may only be used for the funding of qualifying green projects. Such projects should have clear environmental benefits which should be assessed and, where feasible, quantified by the issuer. The qualifying green project categories include, but are not limited to: Renewable and sustainable energy; Energy efficiency; Pollution prevention and control; Terrestrial and aquatic biodiversity conservation; Clean transportation; Sustainable waste management including recycling, efficient disposal of wastage; Climate change adaptation; Green buildings; Environmentally sustainable management of living natural resources and land use; Eco-efficient and/or circular economy adapted products, production technologies and processes; or Any other category as may be specified by the Commission from time to time. Project Evaluation and Selection Issuers engaging in green bonds issue should establish defined internal processes for the evaluation and selection of projects to be funded by the proceeds. Consequently, the issuer should ensure that, at minimum, the following information is disclosed to the investors and the Commission before issuance: The internal process for evaluating how the proposed project is classified as a qualifying green project; The expected environmental benefits of the proposed project; The internal process around the selection and approval of the proposed project; and Any green standards or certifications referenced in the proposed project. Management of Proceeds Issuers should establish clearly defined internal mechanisms to manage and track the proceeds of green bonds. This relates to the traceability of the use of invested proceeds as well as the remaining uninvested balance. Issuers should ensure that the green bonds proceeds are used exclusively for the qualifying green projects
Briefing note on the Finance (Miscellaneous Provisions) Act 2021 – Mauritius
Briefing note on the Finance (Miscellaneous Provisions) Act 2021 – Mauritius The Finance (Miscellaneous Provisions) Act (the “Finance Act”) was gazetted on 05 August 2021 and the provisions are expected to come into effect on the 5th of August 2021 (except as otherwise specified hereafter) to enforce the measures announced in the Budget Speech 2021-2022. This highlight covers the main regulatory measures included in the Finance Act applicable to the Global Business Sector. How the Finance (Miscellaneous Provisions) Act 2021 affect the Foundation Act A Foundation shall authorise at least one officer or any other ordinary resident of Mauritius to produce, upon request from any competent authority, all the basic information on, including information on beneficial ownership of, the Foundation and shall notify, within 14 days, the Registrar, from the date on which an authorisation has been given or, from which there is a change concerning the authorised officer or person. This amendment is extended for limited partnerships act as well. For a period of at least 7 years, every charitable Foundation shall keep a record containing full details of all transactions, both international and domestic, to authorise verification as to whether the funds were obtained and spent in a manner corresponding to the objects of the charitable Foundation. The Registrar may request a charitable Foundation to submit financial statements for such period as he may judge, together with detailed breakdowns of receipts, payments and assets and liabilities, and the charitable Foundation must comply with the request in such manner as the Registrar may decide. According to the Finance (Miscellaneous Provisions) Act 2021, a charitable Foundation must take appropriate measures to (a) confirm the identity, credentials and good standing of its beneficiaries and beneficial owners (if any), (b) confirm if its beneficial owners (if any) are not involved with or using funds of the foundation to assist terrorists or terrorist organisations and (c) confirm the identity of significant donors. Where a Foundation, Council member, former Council member, secretary or former secretary fails to comply with its record-keeping responsibilities related to its transactions, acts or operations or any other provision of the Foundations Act, the Registrar shall inform the Foundation in writing that its name will be removed from the register of foundations if the Foundation does not amend such non-compliance within 30 days of the written notice. The Registrar may notify a Foundation in writing that its purpose or objects no longer meet the requirements of the Foundations Act if (a) there is enough evidence that the Foundation has engaged or is about to engage in activities that are likely to create a serious threat to public safety or public order; or (b) the Foundation has directly or indirectly made, is making, or is likely to make accessible any resources to a terrorist or terrorist organisation, or for the purpose of terrorism. The Foundation may make representations within 21 days from the date of the written notice. How the Finance (Miscellaneous Provisions) Act 2021 affect the Financial Intelligence and Anti-Money Laundering Act A Core Group for Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation must be composed of members of the regulatory and investigatory bodies and relevant ministries to make sure that the effective implementation, by the relevant competent authorities of the Financial Action Task Force international standards on AML/CFT. In particular, the Core Group shall make recommendations to the Prime Minister on matters, including implementation, strategy and international developments relating to AML/CFT; decide on matters relating to the implementation of AML/CFT standards which a relevant competent authority may refer to it; and ensure efficient coordination/cooperation with the National Committee and among all other competent authorities. How the Finance (Miscellaneous Provisions) Act 2021 affect relevant Tax Measures Non-resident trusts and foundations shall no longer be able to file a declaration of non-residence to the Mauritius Revenue Authority and subsequently benefit from any tax exemption. They will be subject to taxation of 15% with a partial exemption on applicable income. A grandfathering provision will nevertheless be applied to trusts and foundations set up before 30 June 2021 up to the year of assessment 2024-25 (does not apply to intellectual property assets/projects acquired or derived post 30 June 2021). The 5-year tax holiday has been increased to 10 years for Family Offices, Fund and Asset Managers effective from the year of assessment commencing 1 July 2022. Companies holding an Export Development Certificate issued by the EDB shall be eligible to be liable to tax at 3%. Companies having an investment certificate that has been given by the EDB shall benefit an 8-year tax holiday on prescribed sectors/activities. According to this Finance (Miscellaneous Provisions) Act 2021, manufacturing companies involved in biotechnology, medical and pharmaceutical sector will be liable to a tax of 3%, subject to meeting the conditions related to substance requirements and not claiming partial exemption. Capital expenditure incurred for the acquisition of patents will be authorised as tax credits and shall be carried forward for the 5-year period. Double deduction would be accessible on acquisition of specialized software and systems and Research and development expenditure (R & D) targeting the African market. Qualifying R & D has been extended until June 2027. Explanations were made in relation to the arm’s length principles to ratify that they are implemented to all entities or income earning activities performed in or from Mauritius. How the Finance (Miscellaneous Provisions) Act 2021 affect the Economic Development Board Act New requirements that are flexible are being enforced regarding the registration of non-citizens with the Economic Development Board (the “EDB”) for an occupation permit, family occupation permit or residence permit, or to profit from any scheme under the EDB Act. Where an application for an occupation permit necessitates the recommendation and views of a public sector agency, that public sector agency shall, within 5 working days from the date of a request from the EDB submit its views, failing which it will be considered to have no objection to the application. A premium investor scheme is being implemented to promote – (a) emerging sectors; (b) pioneering industries and first movers; (c) innovative technologies and industries; and (d) such targeted economic activities as the Minister may approve in relation to the production of pharmaceuticals or medical devices. How the Finance (Miscellaneous Provisions) Act 2021 affect Residence and Occupation Permits to non-citizens New criteria for a retired non-citizen to obtain a residence permit: Minimum initial transfer of USD 1,500; and subsequently either (i) a minimum monthly transfer of USD 1,500 or (ii) transfer of an aggregate of USD 18,000 or more per year (by instalments or otherwise) during the 10-year validity of the residence permit. Monthly salary relevant to an Occupation Permit (OP) for professionals in financial services (fund accounting and compliance services) having at least 3 years relevant work experience, by a company holding a licence from the FSC shall be Rs 30,000. Extension of the Work Permit allowing Mauritians and
Seychelles Country Threat Assessment by Financial Crime News
Seychelles is rated the 2nd best rated country in SSA (out of 40) and 2/14 in Eastern Africa, with an overall score of 72/100 “Low” risk, 83/100 (“Very Low”) level for Threats, and 60/100 (“High”) level for Responses, with an “Improving” trend. Despite the Seychelles reputation as an archipelago of outstanding natural beauty, it suffers from the highest rate of heroin abuse in the world, where an estimated 10% of the working population may be addicted, smuggled in from Afghanistan. Drug trafficking is the primary area of concern highlighted by the country NRA, followed by other offences such as tax evasion, smuggling, corruption, company fraud, fraud/forgery, theft & robbery. In addition, the TA includes illegal fishing as a major concern. Seychelles is not included as a Jurisdiction under Increased Monitoring by FATF or the EU’s new list which took effect on 1st October 2020, however it does remain on the EU’s list of non- cooperative tax jurisdictions, though the country has committed to reforms to become tax-compliant.
