The latest figures released by the Bank of Mauritius who that FDI inflows into Mauritius recorded from 2011 to 2016 were to the tune of Rs 40,78 billion, that is 48% of the Foreign Direct Investment (FDI). The largest inflow to the FDI was from investment with Rs 29,37 billion through the acquisition of luxury residences under the IRS (Integrated Resort Scheme) and Real Estate Scheme (RES) projects.
Investment yields so much because Mauritius forms part of the most attractive countries at tax level. Indeed, tax policy is advantageous with very little taxation, low charges and its double taxation agreement signed with several countries around the world, thus attracting foreign investors.
The Finance Minister Pravind Jugnauth announced in the National Assembly on 9th December last that the proportion of foreign investment in real estate was of 87% in 2915 and should reached 71% in in 2016. The real question for us today is: will this situation persist? After all, Mauritius is smaller compared to other countries, such as China and India.
On his side, Dan Maraye, former Governor of the Central Bank, considers that vigilance must be exercised to ensure that the “real estate sector does not turn into a superhighway for money laundering”. He believes that "foreign direct investment is usually complementary to local investment".
Amendments to promote real estate
In fact, the investment will likely continue to attract the largest amount of FDI (Foreign Direct Investment), as Prime Minister Sir Anerood Jugnauth has proposed amendments to the Non-Citizens (Property Restriction) Act that were presented at first reading on 14 December in the National Assembly.
These amendments involve, among other things, that a non-resident may purchase apartments in buildings with at least two floors, provided that he obtains the necessary permits from the Office of the Prime Minister and the Board of Investment. Foreigners will not be required to register as investors.
However, the amendments are vague and questions remain unanswered:
- Will there be a difference in the price of a property in the same block offered to a Mauritian and a foreigner?
- What method will be used to calculate the tax on these acquisitions?
It is therefore important to clarify the situation in order to standardise the legislation governing the acquisition of immovable property.
Let us hope that the amendments bear fruit and that Mauritius maintains itself as a platform of choice for foreign investment.
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