Mauritius: Turning East And West For Wealth Planning

Last Updated: 15 April 2014
Article by Yuvraj Juwaheer

Mauritius has used India, China and various African countries for investing, and trusts are now being used by clients from mature European markets as well, says Yuvraj Juwaheer.

Mauritius has a well-diversified and structured economy and has successfully emerged as a reliable international financial services centre over the past two decades. It has fully collaborated with the Organisation for Economic Co-operation and Development (OECD) and is positively assessed and appraised by the Financial Action Task Force, the International Monetary Fund and the World Bank.

Having made striding efforts and met international regulatory requirements, it is increasingly being used for collective investment schemes in India, China and various African countries. It continues to record good economic growth even with the worldwide slowdown. And Forbes' eighth annual survey, released in December, shows Mauritius as the 34 only African country among the top 40 economies worldwide for doing business.

Mauritius trusts are now being used by clients from mature European markets as well, despite the fact that clients and families in those markets often favour using succession mechanisms available in the established European centres where wealth has reached third, fourth or fifth generations.

Interestingly, some of the leading corporate trustees in established jurisdictions also use Mauritius to carry out their back-office operations of trust administration, simply because the country has qualified people and excellent infrastructure at a lower cost.

The growth in emerging economies will no doubt produce a new generation of wealthy families and high net worth individuals (HNWI) in these economies, and it is well known that both India and China have seen a huge increase in the number of HNWI.

Mauritius, historically, has attracted private clients from emerging markets who are the first generation of wealthy families and who need to preserve their wealth for their future generations. These clients are typically younger than their counterparts in the developed economies and the dynamic nature of Mauritius' financial services industry often appeals to them.

International assets

Wealthy families in emerging markets often own international assets. So there is a need for asset consolidation to preserve and protect their wealth for future generations. These families are greatly influenced by personal circumstances, cultural and religious beliefs and other practices.

Mauritius is a country with diverse cultural and ethnic backgrounds with a blend of African and Asian origin. The country is culturally closer to clients from African, Asian and Middle East countries. However, the decision to set up a structure for a family does not rest only on these factors. It will require, first and foremost, the availability of excellent service providers with qualified and experienced professionals who are accessible to the client and who are able to deliver a timely and cost-effective solution.

The two major concerns of clients from Africa, Asia and the Middle East are disclosure of information regarding their trust and the risks of losing control over their assets. It is worth noting that trusts are not registered with any public body in Mauritius and consequently the public does not have access to the records of a trust.

This is important from the perspective of confidentiality, The trustee needs to be licensed by the Financial Services Commission (FSC), which has the obligation to conduct customer due diligence on all its clients according to norms recognised internationally.

Trust law in Mauritius addresses any concern relating to control of assets. Mauritian trust law provides for appointing the office of a protector whose role is to ensure a supervisory function over the trustees' activities. The protector has powers that can be set out in the trust deed, which can include the power to appoint and remove a trustee.

Furthermore, regulations allow for setting up a private trust company (PTC), which is a company licensed by the FSC and authorised to act as a trustee to a certain number of family trusts. The client can appoint trustworthy individuals on the PTC's board and can elect to own the PTC through a purpose trust. A PTC structure often gives great comfort to a settler who is concerned as to control of a trust structure.

Foundations law

For clients from civil law countries who may be averse to trusts, Mauritius has enacted an act for foundations, which is a vehicle with features common to both a trust and a company. Unlike a trust, a Mauritius foundation is an incorporated entity with a separate legal personality. The foundation's council supervises the administration and the founder may appoint their advisers or designate persons trustworthy enough to form part of the council.

Foundations are suitable for asset protection as they divest ownership of assets from the founder, and are a good alternative to the simple discretionary trust for preserving family wealth £nr future generations.

However, clients do not choose a jurisdiction simply for its legislation, The quality of advice to set up the wealth planning arrangement, the reputation and track record of the service provider, its international network, and the trust it can place in the service provider or its team, are also important factors.

Mauritius has established a good reputation internationally with the presence of international law firms, a robust and commercially aware regulator and the presence of numerous international banks. Clients can be assured that the jurisdiction has the necessary facilities and resources to ensure that they are adequately protected, receive professional advice and quality service.

It has a network of 39 tax treaties, which are already in force, and nine treaties, which have been signed and are awaiting ratification. It has 13 tax treaties with African countries and a treaty with both India and China among others. No doubt these treaties can enable an optimisation of wealth if proper structures are set up for a family having assets in the various treaty based countries.

Mauritius now plays a vital role in the private client world, where a new generation of ultra high net worth individuals is emerging. The jurisdiction has a good number of private client professionals and the STEP Mauritius branch has more than 200 members and a growing mass of students.

Wealth planners and their clients will find all the essential ingredients necessary for private wealth structures including the rule of law, adequate professional resources and robust asset protection.

Residence permit

The applicable tax rate for both individuals and corporate is 15 per cent in Mauritius. It is a fully tax compliant, intelligent, low tax financial services jurisdiction. Its economy is well diversified with agriculture, manufacturing, tourism, financial services and the seafood hub being the economic pillars.

The integrated resort scheme (IRS) and the real estate scheme (RES) entitle any foreigner who acquires property in the IRS or RES to a residence permit.

Many people who make such an acquisition choose to be fiscally resident in Mauritius and organise their business offering from there with a view to achieving tax and financial services optimisation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions