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Business Will No Longer Be As Usual For Foreign Businesses In Mauritius

July 5, 2019

Mauritius is not leaving anything behind as it begins a major clampdown on foreign funds flowing into the country. Here is the latest on the new tax reform initiated by the Mauritian government: The country’s financial services regulator Financial Services Commission (FSC) has said it would process all applications submitted to it for the purposes of determining whether a business is qualified to benefit from any tax treaties entered into between Mauritius and other countries within two months, provided the applicants fulfill all legislative obligations that include meeting know-your-customer (KYC), anti-money laundering, counter-terrorist financing, and substance requirements, among other things.

“FSC is emboldening its commitment to be a progressive and transparent regulator by fixing a shorter time frame for its own internal processes,” said Neha Malviya, director, Wilson Financial Services.

Mauritius has always been faulted for operating a tax haven economy where foreign companies flock to in order to avoid tax in their home countries. But all that is about to stop, at least to a larger percentage. Going forward, Mauritius foreign businesses coming into Mauritius would be required to comply with the new tax reform.

‘‘If the authorities find that it is not in Mauritius, then the entity is not a tax resident at all, and if it’s not a tax resident, then the treaty benefits it gets with other countries will not be available to it,”experts said.

Many of the business structures currently in place for international companies may be reviewed by Mauritius itself following the tax reform. Other existing structures will be forced to increase the substance requirements within Mauritius for them to continue getting the tax benefits.

“It is a significant change and the way they look at it will be different and may have new test to figure out whether these companies are complying with the new norms. It needs to figured out what are the tests they are going to lay out,” Suresh Swamy, Partner, PwC told Asian Age.

This change would hit hundreds of offshore funds operating out of the island nation and investing in their countries to take advantage of the double taxation treaties between their countries and Mauritius.

As An Example

A South African company may have its board of directors in Mauritius while it is managed from South Africa. In this case, the authorities could say the company is not eligible for tax residency. They will now look at the substance on the ground in Mauritius.

In many cases, the board meetings happen in Mauritius, directors are in Mauritius but the control and management are actually not in Mauritius. This would no longer be the case under the new arrangement.

Also See: Inside Mauritius Where A Majority of South Africans Are Migrating To And Their Reasons

The Implication of This

The fallout of this move will be that many of the structures currently set up in Mauritius and claiming treaty benefits on the basis that they have tax residency certificates may now have to take a look at the structures again.

So, many of the Mauritius structures may get challenged in Mauritius itself and several existing structures will be forced to increase the substance requirements within Mauritius for them to continue getting the tax benefits, experts said.

In simple terms, the consequence of not being considered tax resident in Mauritius is that the company would not benefit from the numerous tax advantages that obtainable from running its business in Mauritius. So, it is not a case of claim benefit from Mauritius, but do business in your home country. You have to manage your business in Mauritius before you claim the benefits.

Mauritius is a tax treaty jurisdiction and has so far concluded more than 42 tax treaties which are in force with the countries listed above.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

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Foreign Investors Dump More Nigerian shares

May 25, 2019

Foreign investors in Nigeria are dumping more of their shares in the country. The Nigerian Stock Market suffered foreign investment outflows of N41bn in April, compared to N30.20bn in the previous month.
This means that they have withdrawn N166bn in four months

A Breakdown of The Movement

Data obtained from the Nigerian Stock Exchange on Thursday showed that that a total of N166.03bn was pulled out of the Nigerian Stock Exchange in the first four months of the year.

While total transactions, whether domestic or foreign on the Nigerian Stock Exchange is put at N148.91bn (about $485.9m) in April, total foreign transactions increased by 37.13 per cent from N56.09bn in March 2019 to N76.92bn in April 2019, according to the NSE’s Domestic and Foreign Portfolio Investment Report for April.

Nigerian Stock Market Analysis For The Month of March

Total foreign outflows also increased by 38.34 per cent from N30.20bn to N41.78bn whilst foreign inflows increased by 35.76 per cent from N25.89bn to N35.15bn between March and April 2019, the NSE said,

The NSE said the total value of transactions executed by foreign investors outperformed those executed by domestic investors by four per cent.
Foreign portfolio investment outflow includes sales transactions or liquidation of portfolio investments through the stock market, while the FPI inflow includes purchase transactions on the NSE (equities only).

The report showed that the value of the domestic transactions executed by institutional investors’ outperformed retail investors by 18 per cent in April.

Charles Rapulu Udoh

Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

Facebook: https://web.facebook.com/Afrikanheroes/

Foreign Investors In South Africa Buy Most Of Their Shares From These Companies

May 21, 2019

That the Johannesburg Stock Exchange is the largest in Africa doesn’t mean it says one thing and means the other. Recent data from the Bank of America Merrill Lynch Global Research shows that more foreigners own shares on the Johannesburg Stock Exchange than South Africans themselves. To be precise, about 52% of the shares on the Johannesburg Stock Exchange are owned by foreigners.

Again, latest numbers from the JSE indicate that foreigners resell most of their South African shares. The amount resold from the start of April to the first week of May, 2019 stood at R5 billion. In fact, foreigners resold about R3 billion shares in the three days before the national and provincial elections alone.

What Areas The Foreigners Are Going To Most

Mining

Some 62% of mining shares on the JSE are now in foreign hands, and overseas investors have increased their mining holdings over the past year, particularly in platinum and gold companies, except for Harmony.

Financial And Industrial Shares

The percentage of foreigners who go for local financial shares is 37% and industrial is 54%.

Foreigners also bought Clicks shares — but sold Woolworths, Massmart, Foschini, Truworths, Dis-Chem, Shoprite and Spar.

Also See: South African Franchise Mug & Bean Launches ‘A Move Thru’ Strategy that Allows Cars Move Through Their Stores

Foreigners were also net buyers of of Reunert and Reinet, the property shares Resilient and Intu, and added to holdings in Capitec.

Telecom and Retail Shares

Foreigners have also been selling their stakes in South African-focused companies over the past year, particularly telecom and retail shares.

The report shows that foreign investors sold Vodacom and MTN, but were net buyers of Telkom in the past year.

Source: BofA Merrill Lynch South Africa Strategy

The Top Foreign-owned Stocks

The top five foreign-owned stocks are now Richemont, BHP, Gold Fields, Harmony, and Anglo Gold.

The domestic names foreigners are going after are Clicks, Lewis, Tiger Brands, Discovery and Telkom which have the highest foreign holdings.

Foreign holdings in Naspers — which represents a fifth of the Stock Exchange — has fallen from 65% in 2016 to 62%.

The report found that if shares listed on other exchanges — like BHP Billiton and Richemont — are excluded, foreign investors owned only 46% of domestic shares, down from 48% last year.

Charles Rapulu Udoh

Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.