PROTECTING YOUR WEALTH: OFFSHORE TRUSTS IN MAURITIUS
From the desire to provide for one’s descendants to the need to keep wealth in the family line, there a several reasons why trusts are created all over the world. More so, trusts as legal creation have survived for several years, since the early medieval times to present simply because they serve the purpose for which they exist, protecting the wealth of individuals and securing assets for a future generation efficiently. An offshore trust is a kind of trusts that has acquired particular notoriety especially among the elite members of society. It is important to understand that creation of offshore trusts by individuals who seek to protect their wealth and provide for future generations is neither illegal nor suspicious. In fact most times, creation of offshore trusts is not something reserved only for extreme wealthy individuals alone but is an option to be embraced and considered if possible, by several individuals who seek to attain financial security for themselves and future generations.
An offshore trust is basically a trust set up subject to the governing legislations of an offshore jurisdiction. The Hague Convention on the Recognition of Trusts permits a settlor to choose a location and applicable laws where one can place assets. Thus a person seeking to create an offshore trust can register assets, movable or immovable or documents too in so far as it is not inconsistent with the law of the State where registration is sought. Mauritius as a jurisdiction provides attractive prospects to non-residents seeking to set up offshore trusts. It has a unified legislation on Trust under the Trust Act 2001, and this act provides a single law for trusts for residents and non-residents of Mauritius and includes latest trends in international trusts legislations. Mauritian legislations accommodates the creation of several kinds of trusts which includes: charitable trusts, purpose trusts and maintenance trusts.
Mauritius is included and recognized as one of the popular jurisdictions for the establishment of an offshore trust. Where domestic (onshore) does not sufficiently attend to a person’s purposes, an alternative offshore asset protection in the form of an offshore trust in Mauritius provides a viable alternative to be explored. General advantages accrue for setting up an offshore trust which includes: lower explicit taxation and increased tax profit, simpler regulatory framework and minimum formalities for incorporation, and offshore trusts are not usually subject to court judgments. In addition to all of the above, setting up an offshore trust in Mauritius has particular advantages peculiar to the common law jurisdiction. Precisely, a trust created in Mauritius can be entirely foreign owned and controlled for the benefit of foreign beneficiaries. The regulatory framework for the creation of trusts in Mauritius is the Trusts Act (“Act”) of 2001. This act provides that a trust can only be created where there is a writing declaring the trust’s purposes and a trust can either be a discretionary trust or a trust set up for a particular purpose, for example a trust set up for a child’s education.
The benefits of setting up an offshore trust in Mauritius are numerous when flanked alongside other recognized offshore jurisdictions. Some of these benefits are explained below.
- Mauritius allows and recognizes the creation of a wide range of trusts. Within Mauritius different types of trust companies have been recognized to exist which include: discretionary trusts, charitable trusts, protective trusts, protective trusts, and purpose trusts.
- A Mauritius trust is flexible and involves little formalism. For example an offshore Purpose Mauritian Trust can be used for Off Balance Sheet Transactions and can also be used where there is a single debtor and several creditors.
- A Mauritius offshore trust benefits from tax advantages available in the jurisdiction. One of this is that an offshore non-resident trust pays no income tax on income derived outside of Mauritius. Whilst resident offshore trusts benefit from double taxation agreement (DTA) available in the country.
- Whereas most trust exist with a limitation by virtue of the Rule against Perpetuity, a purpose trust set up in Mauritius can have perpetual existence.
- The settlor of a trust can benefit from a trust set up, in addition to other beneficiaries of a trust.
- Under the Mauritius Trustee Act, provision is made for the appointment of a protector who is appointed to safeguard trusts created by supervising the acts of the trustee to ensure that the obligations towards the beneficiaries of a trust are fulfilled.
- The privacy of individuals who set up trusts in Mauritius is guaranteed as trusts are not public records so information relating to the settlor of a trust, beneficiary of a trust and location of a trust cannot be revealed.
- An offshore trust in a jurisdiction like Mauritius with a credible reputation for being a trustworthy location for the creation of a trust provides an extra layer of protection for the assets of an individual which domestic (onshore) trust does not provide.
- An offshore trust created by an individual in Mauritius remains accessible to such an individual and within the total control of the individual.
Today, several individuals are setting up offshore trusts in several jurisdictions and Mauritius has been recognized as one of those jurisdictions that offers a conducive clime for the creation of an offshore trust. In addition to other benefits above, the procedure for setting up a trust in Mauritius is also far from being burdensome because with a declaration in writing and trust deed providing details about trust sought to be created, an individual can conveniently set up a trust in Mauritius.
Author: Chukwunazaoku Chukwuma
Reach out to Centurion Law Group to assist with the legalities of setting up a Trust in Mauritius and all other jurisdictions on the African continent.
Zion Ekundayo Adeoye
Head of Africa Investment Desk