Paradise is exactly like... where you are right now. Only much, much better...
- Laurie Anderson
During my first two months of going freelance in the finance writing business, I was blessed enough to work with Africa investor (Ai) magazine on their ‘Mauritian edition’ which boasted President of Mauritius Ameenah Gurib-Fakim on the cover and as the edition’s primary interview. I remember being inspired by this president-but-not-a-politician, a dynamic businesswoman who was determined to secure the best future for her country, economically speaking. With it, I remember the ubiquitous ‘if only SA/our politicians were like this’ malaise.
I thought back to that time last week, sitting in the 7th annual conference held by FISA (the Fiduciary Institute of Southern Africa) in the Sandton Convention Centre. One of the speakers, Gordon Stuart of Accuro in Mauritius, spoke compellingly on the tax implications of South Africans who own assets/ investments in Mauritius and the finer print surrounding that.
Stuart laid out for the conference attendees the fact that forced heirship laws in Mauritius presents and a rather tight spot for the South Africans owning assets there: a non-challengeable right to up to 75% of a deceased’s estate going directly to the children, no matter what age, and no less than 50% if only one child is left. Freedom of succession only applies to the remaining 25% or whatever’s left. And, should the children be actual children, things are even worse for the poor surviving spouse who has to make do on the remainder – because the South African Reserve Bank does not allow South African trusts to own foreign assets.
Good grief, I remember thinking while sitting in the conference, that president seemed so friendly when I was proofreading her quotes… But, of course, this wasn’t about the friendliness of the Mauritian president.This was about the fact that there is no mythical ‘tax paradise’, not even in a country as sunny as Mauritius. It’s about illusions, escapism, ‘the grass is always greener’ and, ultimately, fear.
‘It is our instinct to chase what’s getting away, to run away from what’s chasing us,’ says Fitzgerald’s The Great Gatsby and that ‘reserving judgment is a matter of infinite hope’. As South Africans’ views of where the country is going financially have become increasingly darkened by political shenanigans and uncertainty, so the ‘green light’ of offshore investments has burned ever brighter in our hearts.
For some time now, we have been reserving judgment on anything attractively labelled offshore in an attempt to catch it as a means of running away from our own problems. This is an understandable impulse – but not one we’ve been very honest about. We’re scared. We’re investing our hard-earned cash overseas in various forms because we are rightly in search of a little growth, but more than that, we’re scared.
And so, what I learned at FISA the other day? Paradise always has a price, and it would do people well to look at things like shares in Silicon Valley with a good deal less airbrushing. Just because it’s not South Africa, doesn’t mean it doesn’t have a downside.
And, remember – the taxman always wins, whichever continent he may be on.