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News & Press: SA Merc LJ (SAMLJ)

The Tax Treatment of Holding Companies in Mauritius: Lessons for South Africa

23 November 2011   (0 Comments)
Posted by: TaxFind™
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The Tax Treatment of Holding Companies in Mauritius: Lessons for South Africa


The South African government announced in the 2010 Budget Review that it intends to promote South Africa as a gateway to investment into Africa.During the years 2010 and 2011, government intends to undertake investigations as to what steps it should take in order ‘to enhance our attractiveness as a viable and effective location from which businesses can extend their African operations’.It is envisioned that some relief from exchange control and taxation for various types of headquarter companies located in South Africa will be considered’.

Within the African continent, Mauritius has been aggressive in attracting investment into African countries to be channeled through Mauritius.The Mauritian approach focused on using the tax regime to achieve this purpose.Being considerably aggressive, the Mauritian authorities have been successful in attracting investment in this way.In light of the South African government’s similar intentions, this article discusses the Mauritian corporate tax provisions applicable to holding companies with a view to identifying the tax attributes that could be adopted by South Africa in enhancing this country’s suitability to host headquarter companies.

A headquarter company is a holding company that is often formed where multinational groups of companies have significant economic interests in a region which is distant from its head office.The purpose of a headquarter company is to oversee and co-ordinate the group’s business interests in a particular region.These companies usually provide the full range of administrative and management functions associated with a head office; for example, treasury and tax management, internal audit, public relations,market research and marketing, insurance and accounting.

Mauritius is similar to South Africa in numerous key respects.Like South Africa, it is an African country, a developing country, and a member of the Southern African Development Community.These features make Mauritius the suitable country to study and compare to assess and enhance South Africa’s suitability to hosting holding companies.Furthermore, Mauritius is successfully being used by multinational investors as a gateway to invest in countries in Africa and around the world.

The Mauritian tax system is constantly being adjusted to make Mauritius an even more attractive investment destination.This adjustment is regularly influenced by tax and economic experts from all over the world who recommend incentives that would be more suitable for investors from outside Mauritius.

Source: By Thabo Legwaila (University of Pretoria) SA Merc LJ

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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