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africa|business|financial|logistics|proximity|resources|services|supply chain|operations

Why Local Entrepreneurs are Investing in Mauritius

20th April 2023

     

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This article has been supplied as a media statement and is not written by Creamer Media. It may be available only for a limited time on this website.

Enticed by untapped markets and the prospect of tax incentives for foreign investors, a growing number of South African entrepreneurs are choosing to expand their operations offshore.

“Mauritius is emerging as a particularly popular location for South African entrepreneurs to expand their operations due to its close proximity, attractive tax laws and the lifestyle benefits the island offers,” explains Grant Smee, Managing Director of the Only Realty Property Group.

Only Realty is set to open up its first non-South African branch in Bonne Terre, Vacoas, Mauritius under the name Only Realty Mauritius. “We have obtained our Mauritian real estate license and will begin official operations in May, focusing North Grand Bay to the South West of Mauritius in the Black River/Tamarin area where most South Africans relocate,” shares Sebastien Brazeau who will be heading up the new branch. “We have already listed some exciting Mauritian properties and will be facilitating both rentals and sales, with a particular focus on sales of new residential developments”.

“The country is the easiest ‘Plan B’ for South African entrepreneurs who want an alternative investment and offers an accessible emigration option through its residency permit that can extend to three generations of a family,” Brazeau adds.

Mauritius in the spotlight

The small island nation (population of 1.27 million) is considered the safest country in Africa and offers investors both political and economic stability, with a GDP of 11.53 billion US dollars as of 2021. Mauritius residents have an income tax of only 15% and are not required to pay Dividend Tax, Withholding Tax on Interests and Dividends, Capital Gains Tax or rates and taxes on a property, unlike South Africa. Residents are also entitled to a free repatriation of profits.

In 2015, the country signed a tax treaty with South Africa to eliminate double taxation, meaning that only the country of origin is entitled to tax rather than a business having to pay tax in both countries.

“One of the most significant benefits of starting a business in Mauritius is the tax incentives for foreign investors,” explains Smee. “Businesses can benefit from a four-year tax holiday if they are holders of a registration certificate issued by SME Mauritius, have an annual turnover of less than 30 million rupees and are not involved in the ICT or financial services industry.”

Post-COVID, many entrepreneurs have chosen to become remote workers or ‘digital nomads’. They too can benefit from Mauritius’ ‘premium visa’ which allows remote workers to stay in the country for up to a year without the requirement to pay tax on any income earned while in the country.

Pros and cons of expanding offshore

While the decision to explore new opportunities outside of South Africa has significant advantages, offshore expansion is not without risk and the legalities of opening and operating a business in a new territory should be considered carefully before making the move.

“Thoroughly researching the new country before making the decision to expand can be the difference between success and failure,” explains Smee. “And while every new market is unique, there are some general pros and cons of international expansion that entrepreneurs should take into account.” He lists these as follows:

Benefits of international expansion 

Increased business diversification. “By reducing your reliance on a single market you are protected from economic downturns.” 

Potential cost-savings. “Lower labour costs and tax incentives can result in improved profitability.”

Access to new markets. “Untapped markets mean a brand-new customer base.”

Increased brand exposure and awareness. “Giving you enhanced brand value and credibility in the international marketplace.”

Challenges of international expansion 

Increased complexity and risks. “Challenges include navigating foreign laws and currency fluctuations.” 

Significant initial investment. “Upfront costs include market research, legal compliance and establishing a local presence.”

Competitive challenges. “Established local businesses may have a better understanding of the local market and customer preferences.”

Operational challenges. “These include logistics, supply chain management and language barriers.”

Africa remains a continent of opportunity 

“Africa has always been a lucrative place to invest in due to the abundance of natural resources throughout the continent,” says Smee. 

African countries other than Mauritius included in the top 100 of the World Bank’s Ease of Doing Business index include the Seychelles, Togo, Zambia, Tunisia, Kenya, Morocco and Rwanda, which ranks 38th on the list and is considered the second easiest country in the world to register property, following New Zealand.

“Overall, expanding a business internationally can offer significant opportunities for growth, but thorough research, planning, and strategic execution are crucial to mitigate risks and maximize the potential benefits of expansion,” he concludes.

Edited by Creamer Media Reporter

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