When one thinks of countries with huge personal wealth one’s focus tends to be on the established economies of the West: the United States, the United Kingdom, Germany, Switzerland, and some small European states like Monaco and Lichtenstein. However, over the past decade, things have been changing quite dramatically, and a number of countries not usually associated with wealth are challenging the position of these regions as regards private wealth.
India, for instance, which has always been thought of a state with enormous challenges of poverty, is set to overtake Germany and the UK in its growing sizeable population of high net-worth individuals (HNWIs) and is likely to take fourth position by 2027 in the world’s ranking of large wealth markets.
The data underpinning this conclusion is contained in a report issued by Afrasia Bank, the Global Wealth Migration Review. In fact, the very title of the report reflects the changes in the world’s economic state - the use of the word ‘Migration’ highlights exactly what is happening with private wealth on the globe.
One of South Africa’s neighbouring countries is listed in the Review - Mauritius. Traditionally thought of as a great spot for a sun-drenched beach holiday, this island nation is fast becoming a destination popular among the world’s Dollar millionaires for settling in, for doing business and investing. With its proximity to South Africa, it has proved particularly favourable among South African HNWIs - estimates are that around 280 South African millionaires have relocated there over the past 12 years.
Being French-speaking, citizens from France have also begun to eye this island paradise positively. Similarly, investment by Indian citizens is substantial, owing to its proximity to India and to the tax treaty between the governments of Mauritius and India, which has led to the establishment of 25 000 companies in Mauritius, the majority of which have been established by wealthy individuals from India.
A range of factors accounts for the popularity of Mauritius among the world’s wealthy. Things such as the climate and the quality lifestyle are obvious attractions, but the same is true of many countries in Southern Africa. What has made a significant difference is the approach of the government. Through setting itself a goal to attract wealth, it has transformed the country into a location easy to do business in, with policies favourable to investors, including a progressive tax regime. The Government has also shown itself to be forward-looking. One new development to be welcomed is the likely setting up of a licensing system for businesses to deal in digital assets such as cryptocurrencies, an approach ahead of most countries on the African continent.
From a tax perspective, the situation is particularly favourable. No taxes are levied on capital gains or on dividends. Personal income and corporate tax rates sit at just 15 percent. At the same time the Government has taken the necessary steps to remove harmful tax practices associated with a low tax jurisdiction and, in doing so, enhancing the legitimacy of Mauritius as a financial centre.
With no exchange controls in place, Mauritian citizens easily invest internationally. This is an important consideration for business people since their ability to move funds without bureaucratic restrictions has resulted in many using the island as a business and investment hub.
In addition, the country has enjoyed decades of stability and continued growth. One element of political and economic stability which is particularly important to South African investors, is that property rights are very secure. The state encourages ownership of property and businesses and offers tax benefits for this sort of investment. Through purchasing a property for at least US$500 000, migrants can quickly gain permanent residency in the country. Recent proposals announced in the National Budget Speech aim to make the acquisition of citizenship and passports even more accessible - through the investment into sovereign funds.
In recent years, GMG has grown its operations on the island, a reflection of the increasing demand for advisory services relating to legal issues about immigration, tax advice, establishing businesses in Mauritius, and property investments there. While clients are from a number of different parts of the world, numerous enquiries come from South Africans, whose concerns about political and economic instability, rising taxes, and an extremely volatile currency are pushing them to look outside of their borders.
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