Flexible fund structures have been around for decades, with the UK’s OEIC and Luxembourg’s SICAV being popular examples of flexibility and cost efficiency. These structures have made these jurisdictions the domicile of choice for thousands of funds over this period. To remain competitive in the market and attractive to global investors, Mauritius introduced its Variable Capital Company (“VCC”) framework in 2022 which offer greater flexibility and efficiency in capital management.
The VCC advantage
VCCs offer fund managers flexible, efficient, and regulated environments for their investment activities. Key features include:
● Sub-Funds and SPVs: VCCs allow the creation of multiple sub-funds and special purpose vehicles within a single legal entity. This enables fund managers to operate various offerings, whether collective investment schemes or closed-end funds, with the advantage of segregating and ring-fencing assets and liabilities for each sub-entity.
● Shared Services: VCCs can utilize common service providers and functionaries, including custodians, banks, brokers, compliance officers, and directors for each sub-fund and special purpose vehicle. This maximizes cost efficiencies and streamlines operations.
● Tax Benefits: VCCs are tax resident in Mauritius and subject to a tax rate of 15%. They can benefit from partial exemptions on specific income and the advantages of Double Taxation Avoidance Agreements. Additionally, VCCs are exempt from taxes on dividends, withholding tax, and capital gains tax earned through investments.
Why Mauritius?
Mauritius offers a compelling investment platform due to its attractive tax regime, featuring low corporate taxes and numerous double taxation treaties. The country’s stable political and economic environment, combined with a business-friendly approach and innovative fund structures, makes it ideally positioned to support and maximise international investment opportunities. Additionally, Mauritius’ well-regulated financial environment ensures a high level of security and compliance, while its strategic location in the Indian Ocean facilitates access to high-growth regions in Africa and Asia.
By choosing a VCC in Mauritius, fund managers can leverage a flexible, tax-efficient, and well-regulated framework that supports a wide range of investment strategies while optimising operational costs. The strategic location and well-regulated environment further enhance its appeal for international investment and worthwhile alternative outside of Europe.