Mauritius is the gateway for the structuring of investments into Africa. Mauritius has gone through a series of legal reforms over the past few decades. These reforms have nurtured a stable business-friendly regulatory environment and developed a legal network of Double Taxations Agreements (“DTAs”) and investment promotion and protection agreements known as bilateral investment treaties (“BITs”).

Many investors investing in Africa should consider BITs in their structuring their investments, primarily when they invest in potentially higher-risks markets. Mauritius provides a friendly and a tried and tested regulatory framework to structure investments into Africa. Moreover, Mauritius has created a favorable tax environment. To date, there are DTAs with over 40 countries, including 16 African nations, and Mauritius has signed 48 BITs, which includes 8 African countries and has expanded its network of BITs by signing another 17 additional BITS with African countries which are awaiting ratifications.

Over the past decade, we have witnessed most investments by Development Finance Institutions (“DFIs”) into Africa was structured through Mauritius. This fact confirms the status of Mauritius as the gateway to Africa and is the jurisdiction of choice, both for domiciling fund vehicles and investment holding vehicles. Mauritius being an International Financial Centre (“IFC”)

MAURITIUS IS AN AFRICA COUNTRY

As an IFC Mauritius vehicle structuring its investments into Africa should satisfy substance requirements. The main criteria are as follows;

• The company carries on its core income-generating activities (“CIGA”) in Mauritius.
• The company employs, directly or indirectly, an adequate number of suitably qualified persons to conduct its CIGA.
• The company incurs a minimum expenditure proportionate to its level of activities.

PRIVATE EQUITY AND VENTURE CAPITAL INVESTMENT INTO AFRICA

The African continent Private Equity is scaling up, and Mauritius has an established regulatory framework to set up Funds for investments into Africa. Most of the Funds set up as Private Equity, Venture Capital, or Real Estate Funds into Africa are Closed-Ended structures. Mauritius is the vector jurisdiction used by DFI for the investments into Africa, and moreover, the ecosystem provides comfort to GPs for raising funds from DFIs. Also, although DFIs continue to play an essential role, traditional investors such as Insurance Companies and Pension Funds are becoming more and more a common source of funds for GPs.

The reality is that more and more PE and VC funds are creating an impact on the life of Africans across the continent. Impact investments is a game changer with access to electricity using solar panel and access to water for example. Through these Funds the DFIs is creating an impact.

MAURITIUS TAX PRACTICES NOT HARMFUL AS PER THE OECD

On the 10th of October 2019, the EU Council confirms that Mauritius complied with the good governance tax principles of the European Union (EU). The removal from the grey list confirms that Mauritius, as a jurisdiction, is compliant with all commitments on tax cooperation, having implemented all necessary reforms. Mauritius proactively enhanced its legislation through the reforms brought by the Income-tax (Amendment No.2) regulations 2019. The amendments introduced enhanced substance requirements, which addressed questions relating to the lack of anti-abuse rules by the implementation of Controlled-Foreign-Company (CFC) rules, aligned with those of the EU’s anti-tax avoidance directive. This acknowledgment by the EU Council reaffirms that Mauritius is always at the forefront in adhering to international standards and is an International Financial Centre of choice and repute.

THE AFRICAN CONTINENTAL FREE TRADE AGREEMENT

The African Continental Free Trade Area (“AfCFTA”) is the world’s largest free trade area. This will bring together 54 countries under a single market (with Eritrea, the only African Union member country that has not yet formalized its participation) with a combined population of over 1.2 billion people and combined GPD of over USD 3trillion. With the AfCFTA, it is expected that there will be more investments in Africa. Mauritius being an IFC, is the gateway for investment into Africa. It is a jurisdiction that has matured over the past few decades, and we can see several African Businesses using Mauritius as their jurisdiction of choice for their investments into the region.

Mauritius is set to draw on its long-established links with Africa. It has position itself as a conduit and the catalyst for the emerging Africa growth with its robust regulatory infrastructure and its ease of doing business.

For more information, please contact us at the via the contacts below, or visit our website at www.kryptonfs.com

MAURITIUS
Irfaan Hossany
Phone: +230.5722 .4786
Email: ihossany@kryptonfs.com

GLOBAL
Roderick White, CEO
Phone: +441.338.5285
Email: rwhite@kryptonfs.com