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Under the Spotlight with Jaco Van Jaarsveld

28 July 2020

South Africa born and educated Jaco swapped busy Johannesburg for Mauritius less than two years ago. In this article he talks about how the jurisdiction is adapting and the benefits of island life.


You moved from Johannesburg to Mauritius at the end of 2018 to run the Group's Mauritius office. From a career perspective how big a change was this for you?

The bigger change for me was when I left the legal world to join PraxisIFM in 2015 and I've never looked back. Moving to Mauritius was a big family decision and it wasn't easy. Nineteen months in I'm happy to say things are going really well despite the pandemic curveball.


How has Mauritius been affected by COVID-19?

Travel and tourism contributes to anything between 25% and 30% of GDP here so it has had a very big impact. Some experts are predicting that we will only be back where we were before COVID-19 by 2023/2024. We are COVID-19 free at the moment and have been for two months or so thus we are able to move around freely on the island for the moment with local trade and life getting back to 'normal'.


Mauritius' corporate services industry was for many years highly dependent on the Double Tax Agreement (DTA) with India. To what extent has that changed recently in terms of being able to access treaty benefits economic substance requirements etc?

The DTA between Mauritius and India was very popular in that when a company was established in Mauritius to hold investments in India and the shares in the Mauritius resident company were sold Mauritius had the exclusive right to tax capital gains despite Mauritius not having a capital gains tax. This was changed with a grandfathering clause put in place i.e. that all such investments made on or before 31 March 2017 will fall under the old DTA provision. For all such investments made on or after 1 April 2017 and 31 March 2019 only 50% of the capital gains will be subject to capital gains tax in India subject to the limitation of the benefit clause contained in the DTA and finally that all such investments made on or after 1 April 2019 will be subject to full capital gains tax in India.

However under the amended DTA the withholding tax on interest income paid to a Mauritian resident will not exceed 7.5% (previously 40%) of the gross interest earned meaning Mauritius could be an ideal debt investment jurisdiction. Also the DTA provides for a significant reduction in dividend withholding tax subject to certain conditions being met which was largely irrelevant before but with recent tax changes in India where dividends will again be taxed in the hands of the shareholder it could be ideal if that shareholder was a Mauritius resident (substance) company.


Mauritius is a member of the South Africa Development Committee and has a very extensive DTA network with countries throughout the African continent. Has there been a big shift away from Indian-related structures to inbound structuring for foreign investment into Africa?

Yes we are seeing inbound structuring and we administer a few of these structures. The bulk of new enquiries we have received is however coming from Africa either to house intellectual property or to setup a GBL entity to trade and invest into other African countries and worldwide.


To what extent is Mauritius viewed as a trust jurisdiction these days by the South African market?

Mauritius is very relevant to South African residents from an estate planning perspective and increasingly from a corporate services perspective. Almost in all cases where a GBL entity is created there will be an overlying trust or trusts more often than not established in Mauritius.


What have been the main changes to the corporate tax regime of Mauritius in recent years?

So-called harmful tax practices have been removed and today as a general rule a corporate tax rate of 15% applies to all domestic and global business companies. There are limited circumstances where the tax rate will effectively be reduced to 3% for example in respect of import and export companies where the goods never touch the shores of Mauritius. Companies which are not effectively managed in Mauritius now called authorised companies are not treated as tax resident in Mauritius meaning that the company is actually taxable elsewhere.


What do you see as the main USPs of Mauritius as an international finance centre now and over the next five years?

I believe that Mauritius will despite known challenges continue to play a leading role in facilitating Foreign Direct Investment into Africa and South Asia but also in respect of helping African companies wishing to expand globally. Having a workforce which is fluent in English and French is one advantage while having the option to use alternative types of Mauritius structures for example Protected Cell Companies trusts holding a GBL company (as opposed to a traditional company) specialised funds etc. is another advantage.


How many staff work in the Mauritius office and what is the core business of the office?

We currently have 21 staff. Our main business line is Trust & Corporate Services and we also provide administrative support services to other Group offices. Our corporate service offering is developing well with the main focus on providing substance to GBL entities under our administration.


Finally from a personal perspective how have you found the move from Johannesburg to Mauritius? What do you enjoy about Mauritius and what do you miss about living in Johannesburg and South Africa?

Not a huge transition really. Life in Johannesburg is faster paced in general but it has been fast paced for us since arriving here with me taking over the office travelling and settling in. We settled in the west initially and now live in the north closer to the cricket club I play for and a bigger variety of schools. There are many South Africans on the island and we have made plenty of friends. It is summer all year around so I am not complaining as I really don't miss the cold winter nights in Johannesburg! Being far away from family is obviously a challenge and an even bigger challenge now with not being able to travel at all. That too shall pass. All in all I'm very happy to be here!


This article constitutes neither professional advice nor a binding offer by us to provide professional services . Any engagement in respect of our professional services is subject to our standard terms and conditions of business and the provision of all necessary due diligence.

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