Benefits of the Integrated Resorts Scheme
“Mauritius was made first, and then heaven; and that heaven was copied after Mauritius,” was stated by Mark Twain. So why not own your little piece of heaven through the IRS? Mauritius is an island of tremendous warmth, hospitality and beauty with a pleasant tropical climate and lifestyle making it an attractive place to live and work. Besides being a paradise destination for people on vacation and honeymooners, the island has much more to offer and some of its salient features are: no exchange controls, attractive fiscal policies, an efficient banking system, a stock exchange open to foreign investors, reliable and modern infrastructure, a favourable time zone, open air access policies, daily flights to major capitals and to a large number of destinations around the globe, efficient telecommunications system and a stable political environment.
Mauritius is a multicultural country with warm and welcoming people. The World Bank rates Mauritius 20th out of 189 countries in its Ease of Doing Business Survey 2013 and the Mo Ibrahim Index of Africa Governance 2013 rates it at number one. The country is anchored on a solid and reliable legal system, with the Privy Council of the United Kingdom being the ultimate Court of Appeal.
The Integrated Resort Scheme (IRS) is an initiative of the Government of Mauritius designed to facilitate the acquisition of luxury resort and residential property in an idyllic and delightful setting on the coastal region of the island by foreigners. The IRS is basically a real estate project for the construction and sale of luxurious residential units to foreigners seeking a resort lifestyle with beautiful surroundings or looking to buy a second home in “paradise”. The acquisition of a property by the foreigner under the scheme will allow the purchaser and their family to reside in Mauritius as long they hold the property.
The properties sold under the IRS form part of a complex of luxury villas, apartments and penthouse of international standard and high–class facilities and amenities such as; golf course, marina and individual swimming pool, nautical and other sport facilities, health and beauty centres, high class restaurants amongst others. A day-to-day management service for security, maintenance, waste disposal, gardening and other household tasks are also included. The principal objective of the IRS is to make the owner feel at home whilst at the same time enjoying and benefiting from all the facilities that a five star hotel offers.
Minimum Investment Requirement
Under the IRS, foreigners are permitted to buy property with a minimum investment of USD500,000 (about GBP350,000) plus a land registration duty of USD70,000 or 5% of the value of the property, whichever is higher. Property can be purchased under the IRS either on plan, during development or when construction is completed.
Residence Permit under IRS
What’s even more interesting is that the acquisition of a luxury property under the IRS grants resident status to the buyer, his spouse and dependents. The property owner and his family are able to reside in Mauritius as long as he holds the property. Application for Residence Permit shall be made at the time of purchasing a villa in an IRS.
As we will see below, if the IRS unit is owned by a corporate body, the latter may apply for the status of residence in Mauritius for any shareholder in the company, executive director or chief executive officer of the company. It is definitely a very interesting and fast way for foreigners and their dependents of acquiring residential permits and enjoys all the benefits it provides.
Who can apply to buy a property under IRS?
The following persons may acquire a residential property under the IRS:
• a non-citizen of Mauritius;
• a citizen of Mauritius;
• a foreign company under the Companies Act (of Mauritius) 2001;
• a company incorporated under the Companies Act 2001;
• a société, where its deed of formation is deposited with the Registrar of Companies;
• a trust, where the trusteeship services are provided by a qualified trustee licenced by the Mauritian Financial Services Commission;
• the new Finance Act (of Mauritius) for 2014 provides that a qualified global business as defined under the Financial Services Act (of Mauritius) 2007 holding a Global Business Licence of Category 1 may acquire property under the IRS.
This last category has recently been added with the aim to boost sale and this will definitely help as Mauritius is home to thousands of GBC 1.
Buying an IRS property does not only mean having a sun vacation home in a blissful setting or enjoying a pleasant lifestyle but may also be an exceptional investment product for owners. As such, they may rent or lease the property at times of nonoccupancy through the IRS development company or a service provider appointed by the IRS company and obtain a source of revenue from the property. Furthermore, with the craze and resounding success that those IRS properties are acknowledging, this is definitely a good investment product with the objective of selling same later on with substantial capital gain.
In both cases, the owner is free to repatriate funds or revenue raised from the sale or renting of the IRS property and more interestingly, there is no capital gain tax in Mauritius.
Selling of the property
In line with the above, the owner may sell the property with no minimum selling price restrictions, thus the possibility of realising a capital gain on the sale. The owner shall only provide a written notice to the Board of Investment 30 days prior to the sale. However, the resident status will be lost on selling the property.
The Real Estate Scheme (RES) offers the opportunity to acquire a luxury property below the USD500,000 thresholds, and the foreigner purchasing a property under this scheme will be granted residency provided they buy a property worth at least USD500,000.
Work in Mauritius
If the property owner wishes to work whilst residing in Mauritius, he shall apply for an occupational permit. This is in fact a combination of both a work permit and a resident permit. An occupational permit is granted within three working days of application and is valid for a maximum period of three years and it is renewable. The property owner can:
• take up any job paying more than MUR45,000 a month (approx USD1,500) with the exception for a professional in the ICT sector where the salary should only exceed MUR30,000 a month (approx USD1,000); or
• set up a business generating a turnover exceeding MUR4 million annually with an initial investment of USD100,000; or
• work as a self-employed professional earning at least MUR600,000 (approx USD20,000) a year with an initial investment of USD35,000.
The resident status definitely confer a worthwhile taxation advantage to the property owner who will be considered as a tax resident in Mauritius for tax purposes, and Mauritius being a low tax jurisdiction, the property owner will be liable to income tax at a flat rate of 15% and any business activity will be liable to a corporate tax of 15%.