80% of Foreign Investment In Mauritius Is Real Estate
You can become a citizen of Mauritius if you buy property for $500,000, and more than any other sector, that’s where foreign investors are spending their money in the island nation known best as an offshore tax haven.
A renegotiated tax treaty in May with India hasn’t dampened Mauritius government projections that 2016 is shaping up to be a great year for foreign direct investment.
The island nation is trying to diversify its economy away from traditional sectors of sugar, textiles and tourism into offshore banking, business outsourcing, luxury real estate and medical tourism, Reuters reported.
In the first quarter of 2016, 80 percent of foreign direct investment was in Mauritius real estate, according to Bloomberg. In 2015, it was 84 percent.
The Mauritius government expects foreign direct investment to increase as much as 46 percent in 2016 based on projects that have already been secured, said Ken Poonoosamy, CEO of the Board of Investment, in a Bloomberg interview.
The U.K.’s decision to leave the European Union may hurt or help that projection.
“With uncertainties like Brexit, we need to be very cautious in terms of figures,” Poonoosamy said.
Mauritius attracted less foreign direct investment in 2015 than 2014, based on preliminary figures released by the central bank, Reuters reported.
France is the No. 1 source of real estate investment in Mauritius, United Arab Emirates is No. 2 and the U.K. is No. 3.
Mauritius is the easiest place in Africa to do business, according to the World Bank and the most competitive economy in sub-Saharan Africa, African Development Bank says.
As an offshore tax haven, Mauritius has all the right conditions conducive to encouraging investments to grow, according to TaxHavens.biz. These include no taxes for offshore companies and offshore bank accounts; confidentiality and privacy for individuals and corporations and laws which allow flexibility.
With the renegotiated Mauritius-India tax treaty, Mauritius is still a great holiday destination, just not to dodge taxes in India, IndianExpress reported.
Historically, Mauritius has been a preferred jurisdiction for investors looking to invest in Indian markets, according to MNETax:
The main attraction is the exemption from Indian tax under the India-Mauritius tax treaty on capital gains arising to a Mauritius resident from sale of shares/securities. Such gains are only taxable in Mauritius. And, since Mauritius does not levy capital gains tax, such transactions could result in a zero capital gains tax liability for the investor. Understandably, Mauritius has consistently been one of the top sources of foreign investment into India.
On May 10, though, the governments of India and Mauritius signed a protocol to their tax treaty, allocating taxing rights over such capital gains to India in case of a sale of shares of an Indian company by a Mauritius resident. In order to ensure tax certainty, the Indian government has gone on to provide certain grandfathering and limited limitation of benefits provisions as well. At the same time, withholding taxes on interest have been lowered to a 7.5 percent tax rate. Therefore, while equity investments may need to factor in additional Indian tax costs, debt investments will likely get a boost from the treaty amendments.