Mauritius is becoming the natural gateway for investing in Africa. Mauritius has developed a modern regime for establishing funds which is commonly used for investment structuring into Asia and Africa. By setting up funds in Mauritius, Foreign companies will benefit from a low tax regime and have access to the island’s network of double tax treaties. Mauritius acts as a financial and investment center for Africa as it offers considerable benefits like risk mitigation and investment protection in the region through its wide network of Investment Promotion and Protection Agreements (IPPAs), fiscal efficiency promoted by its growing network of Double Taxation Avoidance Agreements (DTAAs), preferential market access through regional trading blocs, a hybrid legal system, state-of-the-art infrastructure, the presence of international players and a wide selection of professionals.
Using Mauritius as a platform for international investment and private equity funds, positioned the island as the preferred jurisdiction for investing in Africa.
Why Mauritius for Private Equity funds (PEFs)?
- Conducive Business Environment
Mauritius has the most favorable environment in Africa for PEFs, in terms of general investment climate, low political risk, and availability of financial service providers supported by skilled professionals, and good regulatory and institutional frameworks. Mauritius is similarly well -known among fund managers and investors. Mauritius accounts for 8% of PE fund Managers operating on the island and therefore, become the preferred jurisdiction for PE fund managers to operate from.
- Fiscal Efficiency
A Private Equity fund can be designed as a GBC1 vehicle or even as a Limited Partnership. The Limited Partnership Act (“LPA”) was legislated in 2011. Its goal is to use the Mauritian investment platform, by US and European private equity funds, to promote investment opportunities in African and Asian markets. Private Equity funds under a Category 1 Global Business Companies (“GBC1”) are subject to tax at the effective rate of 3% on its foreign sourced income.
Private Equity Funds may also benefit of Double Taxation Avoidance Agreements (DTAAs) signed by Mauritius. Mauritius has a network of 41 DTAAs, 17 of which are included in African countries. In addition, tax exemption on offshore dividends, the non-existence of capital gains tax or withholding interest, the absence of duty on issued capital, unrestricted repatriation of profits and capital, and the distinct advantages of being a treaty-based jurisdiction build an attractive and favorable environment for Private Equity Funds in Mauritius.
- Investment protection
With its 19 network of Investment Promotion and Protection Agreements (IPPAs) signed with African nations, Mauritius proposes unequalled risk mitigation regarding investments in Africa. IPPAs normally provide the following to the investors from the signatory States:
- free repatriation of investment capital and returns;
- guarantee against expropriation;
- most favored nation rule with respect to treatment of investment, compensation for losses in case of war or armed conflict or riot; and
- arrangement for settlement of disputes between investors and the contracting states.
- Local Expertise
The financial services and IT sectors are interested to back up private equity activity. Major international banks and accounting firms are available with more than thirty fund administrators providing fund licensing and back office support services. Technical, legal and logistical support is also available with strong local skills in accounting, legal and fiscal matters.
- The Continental Connection
Mauritius is a member of the major African regional organizations which offer privileged access to markets in the Africa region such as the African Union, Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the Indian Ocean Rim – Association for Regional Cooperation (IOR-ARC).
- Comparably low administrative costs
In Mauritius most of the support services required by PEFs remain competitive and affordable.
- Funds Using Mauritius
Currently more than 820 Global Funds operate from Mauritius. Renowned institutions which have injected funds in the jurisdiction are Standard Life, Goldman Sachs, Carlyle and BlackRock. Other funds groups are Aureos Capital, Integra Partners, Adlevo Capital, the Grofin Group and I&P Capital.
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