Why is Mauritius in investors’ scope?
Mauritius ranked second best to China globally, in the Africa Wealth Report 2019 achieving a 124% wealth growth rate within a decade. Currently, the small island is home to over 4,500 High net worth individuals, who originate mostly from Europe and Southern Africa.
Advisors argue that major reforms undertaken in Mauritius are the answer to the development in competitiveness and transparency as a global financial centre
, whilst being in line with the OECD'S initiatives and at the same time being an attractive tax jurisdiction
for international investors.
Well as of the 1st
of January 2019, the Mauritius Finance Act 2018 has proceeded with the abolishment of regimes, including Global Business Category 1 and 2 (GBC1, GBC2) Licences. Now, what does this mean for investors looking to establish Mauritius corporations?
So let us begin with the most important one the Global Business License or phrased often as “GBL”. The Global Business License, similar to its predecessor GBC1, refers to a Mauritius resident corporation, controlled by non-Mauritius national, who conducts or proposes business activities primarily outside Mauritius.
The Global Business Licence requirements include:
to provide an investment in Mauritius whilst its core business activities to be conducted outside;
managed and controlled in Mauritius;
administered by a management company (ideally acting as company secretary)
carry out a minimum level of expenditure, proportionate to the level of corporate activities;
managed and controlled from Mauritius;
administered by a Mauritius management company;
two Mauritius-Resident directors, of sufficient calibre, able to facilitate appropriate judgement on operations;
main Corporate Bank account to be maintained in Mauritius;
accounting records maintained at the registered office in Mauritius;
financial statements audited in Mauritius;
directors meetings that includes at least two directors to be carried in Mauritius (Telephonic interviews are allowed);
Previously, a Global Business Corporation was subject to a presumption that the amount of foreign tax charged on its foreign source income was equal to 80% of the Mauritius tax chargeable with respect to that income ('Deemed Foreign Tax Credit'). In place of that, Mauritius has introduced the partial exemption regime, whereby 80% of income will qualify to be tax exempt, applicable if the GBL meets the substance requirements. A Global Business License is subject to a maximum effective tax rate of 3%
assuming it has met the substance requirements.
The 80% Income tax exemption is effective from 1st
of January 2019 and is applicable to:
Foreign-source dividends derived by a company;
Interest derived from overseas by a company other than a bank;
Profit attributable to a permanent establishment of a resident company in a foreign country;
Foreign-source income derived by Closed-ended Funds, Collective Investment Schemes (CISs), CIS manager and administrator, Investment Advisers, Asset Managers, which are
Licensed and Approved by the Mauritius Financial Services Commission;
Income derived from overseas by companies engaged in ship and aircraft leasing.
Note: Global Business License companies may still claim credit for actual foreign tax incurred.
Just like the GBL, the Authorised Company “AC” regime was introduced as a successor of the GBC2. The Authorised Company regime treats companies incorporated in Mauritius as Non Resident.
Under Mauritius companies Act and the Financial Services Act 2007 a company deemed non-resident for income tax purposes, its effectively managed and located outside Mauritius.
The requirements include
Income generated from abroad;
Activities are undertaken abroad ;
The majority of shares and voting rights in the company are held or controlled by individuals non-citizens of Mauritius;
Demonstrate that the place of effective management is outside Mauritius;
The majority of the directors meetings are held abroad; and
Strategic decisions are carried abroad.
Since the Authorised Company is treated as Non Resident Company any dividend distribution to a foreign shareholder, income from dividends, interest and royalties will not be subject to tax in Mauritius. Consequently, an Authorised company is ideal for investors intending to engage in international trading, marketing and consultancy services, management services (including shipping), logistics and assets holding.
Authorised companies under the Mauritus FSC provisions an AC must employ a permanent management agent in Mauritius, which will take on the responsibilities of resolutions, board minutes, record keeping, transaction record archiving, etc.
The Mauritius FSC indicates that Authorised Companies are prohibited from conducting the following business activities including, Banking, Financial Services, Collective Investment funds, Fiduciary Services or any other activities that the FSC may determines be interfering with the good repute of Mauritius as a centre for financial services or violates to public interest.
Overall, these changes highlight that the Government of Mauritius is looking to comply with the EU and OECD initiatives by removing the preferential treatments that existed between local and global business license companies.
Our clients are engaged in all commercial sectors and range from small, privately owned enterprises to larger sized groups and multinationals. Our services are tailored to suit your needs and requirements. Doing in business for us is simple, contact us today and find out how we can help you set up your new business in the most effective and efficient way.
If you would like to download our Mauritius fact sheet, please click here.
We would be happy to assist you in all enquiries concerning registering your new company in Mauritius.