As featured in Mauritius Finance Magazine, Brendan Gallagher of Lima Capital LLC delves deep into how Mauritius is shaping the future of wealth management by providing flexible, cost-effective, and internationally recognised fund structures that cater to the evolving demands of the investment community.
Mauritius has rapidly become a key hub in the global wealth management industry, offering tailored fund solutions that meet the specific needs of investors and fund managers.
With its strategic geographical location, robust regulatory environment, and attractive fiscal policies, Mauritius is gaining recognition as a preferred jurisdiction for establishing and managing funds.
Mauritius: A strategic hub for bespoke wealth management solutions
Mauritius has positioned itself as a leading jurisdiction for wealth management in the African and Indian Ocean regions. Known for its advantageous tax system and extensive network of Double Taxation Avoidance Agreements (DTAAs), Mauritius offers fund managers and investors a reliable and efficient environment for structuring international investments.
The island’s sound political and social stability further enhances its appeal, providing a secure backdrop for wealth management activities.
The advantages
Bespoke fund solutions in Mauritius provide fund managers with the flexibility to tailor their funds according to specific investment strategies and investor needs. These structures are designed to accommodate a wide range of asset classes, with varying investment approaches, from traditional equities to specialised assets and private equity.
The ability to create customised solutions ensures that funds domiciled in Mauritius can efficiently meet the demands of a global client base, while also benefiting from the island’s regulatory and fiscal advantages.
Key features of Mauritius as a wealth management jurisdiction
Mauritius offers several key attributes that make it an attractive jurisdiction for wealth management:
● Favourable Tax Regime: Mauritius offers a competitive tax environment, with investment funds subject to a tax rate of 15% on net chargeable income. The absence of withholding taxes on dividends, capital gains, and interest further enhances its appeal. Additionally, funds with a Global Business Licence benefit from a partial 80% tax exemption, leading to an effective tax rate of just 3%.
● Strong International Relations: Mauritius has signed 45 Double Taxation Avoidance Agreements (DTAAs) and 29 Investment Promotion and Protection Agreements (IPPAs), with several more pending ratification. These agreements provide significant advantages, including protection against expropriation, free repatriation of capital, and access to larger markets.
● Political and Social Stability: Mauritius is ranked first in Africa for ease of doing business and is recognised as the most peaceful country in Sub-Saharan Africa. This stable environment is crucial for long-term wealth management and investment activities.
● Secure Legal and Regulatory Frameworks: The robust legal and regulatory frameworks in Mauritius, including compliance with international AML/CFT standards, provide a secure and trustworthy environment for fund management.
How Mauritius is shaping the future of wealth management
Mauritius is at the forefront of the evolution in wealth management by offering innovative and adaptable fund structures. The introduction of the Variable Capital Company (VCC), for example, adds flexibility and efficiency to fund management. By allowing multiple sub-funds within a single legal entity, VCCs streamline operations and reduce costs, making them an attractive option for global fund managers.
As digital assets, FinTech, and Artificial Intelligence continue to evolve, they bring both significant opportunities and challenges for Mauritius. To address these developments, Mauritius has introduced several key regulations, such as the Virtual Asset and Initial Token Offerings Services Act 2021, Peer-to-Peer (P2P) Lending Rules 2020, Crowdfunding Rules 2021, and frameworks for Payment Intermediary Services (PIS) and Robotic and Artificial Intelligence Enabled Advisory Services. It is essential for Mauritius to continually assess and refine its regulatory framework, ensuring that it strikes a balance between fostering innovation and protecting consumers. This vigilant approach is vital to providing these emerging services effectively while maintaining investor confidence.
Regulatory framework and compliance considerations
Mauritius’ regulatory framework is designed to facilitate the smooth operation of investment funds while ensuring compliance with international standards. The Financial Services Commission (FSC) of Mauritius oversees the authorisation and regulation of funds, ensuring that they adhere to the necessary requirements.
These include submitting a proposed fund prospectus, private placement memorandum, and fund agreements. The FSC’s rigorous regulatory oversight provides a secure environment for both fund managers and investors.
Common misconceptions about fund solutions in Mauritius
One common misconception about Mauritius is that it only offers benefits due to its favourable tax regime. While the tax advantages are significant, Mauritius also provides a stable and transparent regulatory environment, robust legal frameworks, and strong international relationships that contribute to its standing as a premier jurisdiction for wealth management.
Another misconception is that Mauritius is primarily suited for small-scale fund managers. This is far from the truth. The jurisdiction has demonstrated its capacity to accommodate funds of all sizes and complexities. From boutique fund managers to large-scale investment power houses such as Black Rock, Mauritius offers a flexible and scalable platform for clients to leverage. Its ability to tailor fund solutions to specific investor requirements, coupled with its efficient fund administration industry, makes it an attractive choice for a diverse group of stakeholders.
The future of wealth management with bespoke fund solutions in Mauritius
As the global wealth management landscape continues to evolve, Mauritius is well-positioned to lead the way with its bespoke fund solutions.
The island’s commitment to maintaining a competitive and transparent environment, coupled with its innovative regulatory developments, ensures that Mauritius will remain a preferred destination for fund managers seeking to establish and manage funds that meet the complex needs of today’s investors.
