Choosing between South Africa and Mauritius is no mean feat. Each country has its own allure and leaving home is never easy. But as a swallow, it’s not either/or – you can have the best of both.
“Traditionally, the concept of the ‘swallow’ was applied to Europeans coming down to South Africa to escape the harsh conditions of their native winters and embrace the sun and shine of African summers,” says Director of Safyr Utilis, Shawn Thompson. “More recently, it’s being used to describe South Africans splitting their time between South Africa and Mauritius, maintaining their family roots and social ties at home and building their wealth abroad.”
For years now, Mauritius has attracted South African investors with its stable political and economic environment, low barriers to entry, ease of doing business, and attractive tax regimes. South Africans are among the leading foreign purchasers of property in Mauritius, and the number continues to grow. It’s an excellent business and investment destination for South Africans, including those who wish to keep South Africa as their primary residence.
Legalities of being a swallow
Although South Africans do not require a visa to visit Mauritius, there are a selection of working visas and permits that allow foreign investors and business owners to operate as swallows. The two top level options, with subcategories below them, are the Occupation Permit (OP) and the Work Permit with a Residence Permit.
The former is a combination of a Work Permit and Residence Permit that caters for three specific categories: investor, self-employed (both valid for 10 years initially), and professional (initially valid for 3 years). Dependants of permit holders also quality for Residence Permits that are valid for the same duration as the permit of the main holder.
“You don’t have to come in on an Investor Permit or pack up and leave all in one go – I certainly didn’t,” says Thompson. “I’m on the self-employed option, quite painless to apply for, not too expensive.” He adds, “There’s a misconception that you have to buy a property to get the residency. It’s not the case.”
To qualify for the Self-Employed Occupation Permit, applicants must be engaged in a professional activity under the service sector only and must work exclusively for their own account as a one-person business. A minimum transfer of USD35 000 into their Mauritius bank account is needed to apply. For remote workers, there is the one-year Premium Visa option, which caters for professionals or tourists who are self-employed/employed by a company based outside Mauritius.
The professional option is available to expats employed in Mauritius by virtue of a contract of employment. Applicants need to show a minimum basic monthly income of MUR60 000 (+/- USD1 300) unless they are working in the ICT, BPO, pharmaceutical manufacturing, and food processing sectors, in which case, the required basic income is MUR30 000 (+/- USD675) per month. The budget speech 2023-2024 has announced that the monthly income of MUR60 000 will be reduced to MUR30 000.
Investors have the most options available. Provided they are a shareholder and director of a company incorporated in Mauritius under the Companies Act 2001, there are four routes to entry.
- New businesses must make a minimum transfer of USD50 000 into the company’s account.
- Existing or inherited businesses must have a minimum net asset value of USD50 000 in addition to a minimum turnover of MUR12 million in the three years preceding the application.
- Importing high-tech equipment that has a minimum value of USD25 000 and transferring a minimum of USD25 000 into the company’s account.
- The Innovator Occupation Permit. There are no minimum investment criteria, but this option requires applicants to submit details of their innovative project to the Economic Development Board (EDB). At least 20% of the project must comprise a Research & Development (R&D) component.
The benefits of being a swallow
Being a swallow means having the best of both worlds, and that is certainly true regarding South Africa and Mauritius. As Thompson says, “I have two friends that are taking the necessary steps to get setup in Mauritius while maintaining ties in South Africa. One of them – he’s got older kids – is going to split his year between SA and Mauritius, six months at a time. He wants to keep his SA operation running while he builds his new business in Mauritius. It gives you the best of both worlds – you still maintain that close contact with home and keep your finger on the pulse in terms of what’s happening business wise. It’s a good way of doing things.”
That’s the beauty of being a swallow. You don’t have to sacrifice the things that you’ve built up at home. Your family does not need to uproot their whole lives, and if you have children, they can continue their schooling and education in South Africa while you set things up on the island. As mentioned, buying property in Mauritius is not a requirement for residency, and short-term lets are an excellent interim option.
Speaking of getting his own process up and running in Mauritius, Thompson offered, “It took me 18 months to set up my little business here [Mauritius] initially, and I commuted on a regular basis. It was just a quick flight out. I would come out for 10 days at a time, and then when things started getting traction, I started considering more long-term avenues. And you don’t have to come in on an Investor Permit or pack up and leave all in one go – I certainly didn’t.”
What are the tax implications?
Mauritius has a straightforward taxation system; corporate and personal income were taxed at a maximum rate of 15% (with concessions available). Following the Mauritius National budget speech 2023-2024, a progressive system will be introduced for individuals as from 1 July 2023 whereby there will be different tax bands which range from 0% to 20%. There is no capital gains tax or inheritance tax, no worldwide debt cap on interest deductions, and no exchange controls. In addition, Mauritius has signed Double Taxation Avoidance Agreements with 46 countries (South Africa is among these), and multiple other agreements are in various stages of approval.
Domestic taxes will apply if a person is considered a resident for tax purposes or the person derives any income from Mauritius. Tax residency is determined if the person meets the following circumstances: his/her domicile is in Mauritius with no permanent place of residence outside the country; he/she spends 183 days or more in Mauritius during a tax year; or he/she spends 270 days or more in Mauritius in the 2 years leading up to the tax year and including the tax year.
Mauritius has a tax treaty with South Africa. The clauses relating to residence should be taken into account to determine where the residence of a person is for tax purposes.
How to set up this lifestyle
The first steps to living as a swallow are securing the permits that allow you to conduct business in Mauritius. Thereafter, there are certain administrative tasks that include opening a bank account and setting up a company (either an Authorised Company or a Global Business Company). The entire process is straightforward and easily navigated with an experienced partner such as Safyr Utilis. Safyr Utilis has an extensive network in Mauritius and can assist with all aspects of the application process and any elements beyond.
