There are many reasons why South Africans, and international clients relocating to South Africa, prefer an offshore hub for their international affairs and offshore ownership of a South African company.
Below we discuss the merits of offshore ownership of a South African company along with some of the benefits and decisions that need to be made:
Jurisdictions for offshore companies
When choosing a jurisdiction, there are numerous offshore destinations where one can locate business and investment interests. It is necessary to ensure that the selection of the right jurisdiction is made in respect of political and economic stability, conducting business with certainty, confidence and corporate security.
- An attractive corporate and personal tax regime with access to Double Taxation Treaty Agreements.
- Minimal withholding taxes on the payment of dividends and Royalties from contracting states.
- An appropriate infrastructure that allows ease of communication and travel to and from the jurisdiction.
- Legislation that is modern, flexible and well proven.
- Administration that allows availability of operational services on a cost efficient basis. Skills should be a pool of well educated, experienced and multilingual staff.
Offshore ownership of a South African company from Mauritius
As a first consideration we will always look to structure a corporate solution within the jurisdiction of Mauritius. Mauritius is internationally recognised as the financial leader in Africa and ranked number one in Africa and nineteenth globally for ease of doing business by the World Bank. Mauritius offers cheaper costs for both Company and Trust incorporation and on-going operations, far lower than “traditional” centres like Isle of Man, Guernsey and Jersey. Below we summarise some of the benefits of offshore ownership of a South African company from Mauritius.
Offshore ownership of a South African company from Mauritius also offers a favourable Tax Environment consisting of:
GBL1 corporate tax at a maximum of 3 % of profits.
- No capital gains tax, withholding tax or estate taxes.
- Personal tax at 15%. An attractive personal tax basis where the personal rate of Income tax in Mauritius is 15%. It is a remittance based jurisdiction which means that whilst you must declare your worldwide income, you only crystallise a tax liability if and when it is remitted to the island.
Exchange control and transfer pricing
There are no transfer pricing rules and no exchange control restrictions.
It is conveniently located with frequent daily flights of less than 4-5 hours from South Africa which provides efficient use of time when attending board meetings, compared to 12 – 18+ hours to Channel Islands, Isle Of Man and Singapore to name a few.
Double Taxation Treaty
There is a broad and increasing Double Taxation Treaty agreement network which consists of 14 African nations, empowering you to expand your business across Africa, 9 EU nations including UK, France and Germany, the largest EU investor in Africa, and 8 in Asia including China and India.
There are various residency schemes for obtaining tax residency and for running your business from Mauritius. The personal tax rate of only 15% is possible through the purchase of real estate as well as through business ownership and investment options.
Access to skilled labour
Mauritius offers substantially lower cost of operations without the loss of a skilled and experienced workforce. There exists a multi-lingual workforce and a historically multi-cultural population with strong cultural links to Africa, India and Asia.
An accessible and pragmatic regulator that is respected world-wide for its legal and regulatory framework, allowing ease of business.
An inherent understanding of the market and ability to operate across European, African and Asian time zones.
Member of SADC and COMESA which allows benefits from attractive trade agreements.
Business administration opportunities in Mauritius
Administration offers opportunities for business process outsourcing from other jurisdictions. Regardless of where an entity may be located, in many instances transferring certain administration and other activities to a highly skilled and cost efficient platform in Mauritius will result in substantial benefits for your business.
Mauritius is ideal as you can start a business in 3 working days. There is no minimum capital requirement, 100% foreign ownership is allowed, and there are cheaper operating costs as incorporation and operational costs are far lower than traditional jurisdictions like Isle of Man, Guernsey, Jersey etc.
There is an innovative suite of regulated structures such as Limited Companies with Global Business Licence 1 & 2, Limited Companies Domestic, Limited Partnerships, Protected Cell Companies and International Trusts and Foundations.
Offshore ownership of a South African Company in other destinations
Whilst Mauritius is our first port of call there may be occasions where it is necessary for us to recommend the incorporation of an entity in an alternative jurisdiction. These include, for example, Singapore, Seychelles, Channel Islands or Cayman to name but a few. It may also be necessary to blend jurisdictions and to use, and connect, entities across those jurisdictions in order to achieve the optimal structure in terms of taxation, confidentiality and efficiency.
There are many roles and responsibilities that arise when forming, managing and administering business structures. Our trusted partners at CAP take the entire burden of ensuring regulatory, commercial, exchange control and taxation compliance. Some of the key roles we undertake on the client’s behalf include, but are not limited to:
- Guidance on setting up a Trust/Foundation/Company/Partnership;
- Formation and approval of the structure with the relevant authorities;
- Provision of resident directors;
- Provision of domiciliation and compliance services;
- Company Secretarial services, administration and back office support;
- Accounting and book-keeping services;
- Bank account opening and facilitation;
- Legal services including the vetting and drafting of documents.
It is personal!
Please note that offshore structures are not a “one solution fits all” scenario and proper consultation needs to be undertaken to ensure the correct solution is implemented.
An offshore structure does not stand in isolation and therefore needs to be formed by someone who provides a comprehensive service in order to ensure the last will and testament, life insurance and various other aspects are dealt with correctly in order to make use of the structure’s benefits.
Getting further help
For a one hour free consultation regarding the evaluation of the usage of an offshore structure contact you can contact our partners CAP Chartered Accountants here.
This information has been supplied to Intergate Immigration from CAP Chartered Accountants who are able to offer advice on a number of issues pertaining to the establishment and running of a business as well as offshore ownership of a South African company.