Tax benefits of moving to Mauritius
Tax benefits of moving to Mauritius
When those in the know talk about the advantages of moving to Mauritius, tax benefits are a hot topic. Both individual and corporate tax rates in Mauritius compare favorably and are a major motivator, particularly for South Africans looking for Plan B.
On that note, individuals and businesses also have the advantage of the tax treaty agreement between South Africa and Mauritius. This prevents double taxation as long as you are on the island for more than 183 days. What's more, there are no taxes payable on dividends, inheritance, profits, or capital gains.
Motivations to move
People attracted to Mauritius may be interested in:
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adopting the island lifestyle, for the sake of improved health and wellbeing, a wonderful climate, pretty landscape, and safe environment
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building a property investment portfolio, or
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establishing a business on the Asia-Africa Corridor.
Corporate tax benefits
Corporate tax is determined by government and charged to companies and corporations that make a profit. Corporate tax rates vary worldwide. The Caribbean, Cyprus, Malta, Portugal, Australia, the United Kingdom, and the United States are the main countries that compete for foreign investment by South Africans through citizenship by residency or citizenship by investment programs. It is interesting to note that their corporate tax rates have remained unchanged from 2019 to 2021.
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South Africa - 28%
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United Kingdom - 19%
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United States of America - 27%
Individual tax rates
KPMG's individual income tax rates table shows comparisons for countries around the world. We have selected those with foreign investment potential for South Africans. KPMG warns that although these rates are checked regularly, they must not be relied on for business decisions. It is always best to check with the relevant country's tax authority before using them for that purpose. Here is a guideline:
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Antigua and Barbuda - 0%
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Cyprus - 35%
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Grenada - 28%
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Malta - 35%
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Mauritius - 15%
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Portugal - 48%
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Saint Kitts and Nevis - 0%
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South Africa - 45%
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United Kingdom - 45%
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United States - 37%
Should I stay or should I go now? South Africa vs Mauritius
An article by Dr. BC Benfield, a retired professor at the Department of Economics, University of the Witwatersrand, highlights that South Africans may be persuaded to linger longer in their home country if corporate and individual tax rates were more in line with the rest of Africa, if not the world.
"Apart from one of the highest rates of company taxation, South Africa also boasts one of the highest rates of personal income tax in the world. At a maximum marginal rate of 45% (payable on earnings from a paltry USD 115,000 per year) it is the second highest in Africa after Cote d'Ivoire. Every other African country has a lower rate of personal tax," he says.
Mauritius applies a flat rate of 15% across highest income tax, corporate tax and sales tax brackets while South Africa applies rates of 45%, 28%, and 15% respectively.
Excise duties in South Africa:
Wine - 11%
Beer - 23%
Whisky - 36%
Cigarettes - 52%
Petrol - 68% (i.e. R68 of every R100 spent on fuel goes to tax)
Taxes on wealth and assets include:
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Buying property: Taxes slide up to 13% on purchases from R10m
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Municipal property rates: R822,00 per R100,000 value in Johannesburg
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Estate duty: On death, a further 20% of your assets above R3,5m goes to government.
Excise duties in Mauritius, as per the Economic Development Board (EDB) Budget Newsletter 2021-22:
Wine of grapes, per litre, in bottle - MUR 213.40
Beer per litre - MUR 43.60 (up to 9 degrees); MUR 60.60 (above 9 degrees)
Whisky per litre of absolute alcohol, in bottle - MUR 1,848.00
Cigarettes per 1,000 - MUR 5,625.00
Petrol - Maurice Ile Durable (MID) rate: All petroleum products MUR 0.30 /litre
Registration duty
To create a level playing field with other property schemes and accelerate the sale of a few remaining Integrated Resort Scheme (IRS)/ Real Estate Scheme (RES) units, registration duty on the sale of either will be levied at the rate of 5% or USD 70,000, whichever is the lower.
The Non-Citizens (Property Restriction) Act will be amended to provide that no approval is required from the Prime Ministers' Office for disposal of property under the Property Development
Scheme, Integrated Resort Scheme, Business Purpose, Smart City and G+2). However, the EDB will simply have to notify them of such disposal.
Rental income
According to the Global Property Guide, nonresidents' rental income is taxed at a flat rate of 15%. Income-generating expenses are deductible when computing for the taxable income. Nonresidents earning rental income are subject to withholding tax of 5%, which is credited against the individual's income tax liability. Anyone who "owns more than one residence or owns a property costing more than MUR 2 million (USD 54,795) is now required to file an income tax return, whether his income is taxable or not."
Budget highlights 2021-22 - summary of tax benefits in Mauritius by Temple Group
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The scope of the partial exemption tax regime has been expanded to include investment dealer and other leasing activities.
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The tax holiday scheme is extended for family offices, fund managers and asset managers from five to 10 years. Family offices no longer need a Global Business License.
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The Pharma and BioTech sectors are exempt from land transfer tax, registration duty, land conversion tax and VAT on construction. There is a full tax credit for cost of acquisition of patents to make generic drugs and medication. Corporate tax for this sector has been revised from 15% to 3%.
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There is no land transfer tax on student campus building. Corporate income tax for private universities with international accreditation will be 3%, down from 15%.
08 Oct 2021
Author Rinie Boshoff