Mauritius features all the great qualities of an attractive jurisdiction for international investors. Being an independent state with a stable political and economic landscape, Mauritius takes pride in its advanced telecommunications and other high technologies. It is home to many bi-lingual professionals educated and trained in Europe and the United States. It also boasts a dynamic banking and financial infrastructure consisting of globally renowned banks working in an exchange, control-free landscape. Mauritius enjoys a rapidly expanding network of double taxation agreements with other countries that allow efficient tax planning for international investors. 

Mauritius’ International Financial Centre

The Mauritius International Financial Centre (IFC) is an established business jurisdiction for international tax planning. It is being utilized for establishing high-profile investments into Europe, as well as other emerging markets in Asia, Africa, and the Far East.

As per the recent amendment and consolidation of the primary legislative framework, the Companies Act 2001, the Trusts Act 2002, and the Financial Services Development Act 2001, these frameworks connected to the International Financial Centre (IFC) has now reached the highest standards desired by initiators in the global financial services market. 

Additionally, the enactment of laws such as the Financial Intelligence and Anti-Money Laundering Act provides investors and shareholders a greater level of confidence in operate in a properly regulated and safe environment. 

Mauritius’ tax regime is clear, stable, and very conducive for foreign-owned business operations. There is no withholding tax on dividends or interests paid by Mauritius companies to non-residential beneficiaries. There are no capital gains and no  inheritance tax assessed on foreign-owned companies in Mauritius. Considering all these factors, the number of foreign investors setting up a company in Mauritius has been increasing in recent years.

Mauritius Legal System 

• Features a hybrid system, combining elements of both civil and common law practices. 
• Governed by the French Code Napoleon and English common law. 
• Supreme Court is the highest judicial authority, with unlimited powers to hear civil and criminal proceedings. 

Federal Unitary System 

• Municipal and district levels of government have a certain degree of autonomy, but still under the authority of its central government. 

Different Business Structures in Mauritius

Companies

• Under Companies Act of 2011 a Mauritius company can be either private or public.
• Private company can have up to 50 shareholders and cannot offer shares to the public. 
• Mauritius companies can have limited and unlimited terms or lifespan. 
• Can be limited by shares, in that liability of shareholders are limited to the amount of unpaid on the shares held by shareholders, 
• Can be limited by guarantee, where liability of members is limited to the amount shareholders undertake to contribute to the overall assets of a company in the event of debts or losses.
• Can be limited by shares and by guarantee. 
• Can be unlimited, where there is no limit in the liability of its shareholders. 
• Set up under the Civil or Commercial Code
• Companies are fiscally transparent, where the partners’ liability are limited. 
• Commercial companies must be registered with the Registrar of Companies. 

Limited Partnerships

• Governed by the Limited Partnerships Act of 2011. 
• Can elect to have a legal personality.
• Must have at least one general partner liable for all debts and obligations of a partnership.
• A limited partner will be liable up to the maximum amount of its commitment. 
• Can elect to have a separate legal personality. 
• Regardless of whether it chooses to have a legal personality, partners are deemed liable for the partnership’s debts. 
• Can be set up and registered within three business days. 
• Must draft a partnership agreement that determines the conducts of its affairs, mutual rights, and duties of its partnership. 
• Partnership agreement is a binding contract for present and future partners. 
• Based on the Limited Partnership Act of 2011, limited partnerships can determine most of its business partners, failing which the default rules of the Limited Partnership of 2011 apply. 

Limited Liability Partnerships

• Limited Liability Partnership (LLP) governed by the Limited Liability Partnerships Act of 2016 (LLP Act) is a new business structure. 
• Combines features of a company and limited partnership. 
• Can be used for professional and consultancy services, as well as legal services under the Global Legal Advisory Services License issued by the Financial Services Commission (FSC). 
• Can have two or more partners. 
• Other business structures can concert into a Limited Liability Partnership and re-domiciliation of foreign-owned Limited Liability Partnerships or Mauritian Limited Liability Partnerships, and from Mauritius. 
• No restrictions on residency status of partners. 
• Partners can be a natural person, a corporate entity, or unincorporated body. 
• Must appoint a manager, a resident of Mauritius. It can be a local management company if the Limited Liability Partnership (LLP) holds a Global Business License, or a qualified secretary. 
• Must be registered with the Registrar of Limited Liability Partnerships.

Trusts 

• Governed by the Trusts Act of 2001. 
• Created either as purpose or beneficiary trusts, by disposition of property between living persons or by will, or by holding property on trust. 
• Trust instrument must be created in writing. 
• Participants are issued with units in the trust. 
• Easy to set up because they do not need to be registered, incorporated, or required annual reporting. 

Foundations

• Governed by the Foundations Act of 2012. 
• Can be set up for any purpose specific in its charter, given objectives are not opposing the laws of Mauritius. 
• Can be categorized as charitable, non-charitable, or both, and for the benefit of a natural person or a group of persons to perform a specified purpose, or both. 
• It can be set up within three business days. 

What is a Global Business License?

The following entities must apply for a Global Business License from the Financial Services Centre in order to conduct business:

• A corporation other than an Authorized Company 
• A bank licensed by the Bank of Mauritius 
• Other corporations specified under the riles of the Financial Services Centre. 

All these entities hold the majority of shares or voting rights, legal of beneficial interest, are controlled by a non-resident. 

The following are not required to apply for a Global Business License:

• Resident corporations incorporated or registered on or before 31 December 2018 and does not hold a Category 1 or 2 GBL on or before 31 December 2018. 
• Registered corporation incorporated or registered after 31 December 2018 that obtained approval from the Financial Services Centre. 
• Trust governed by Mauritius law. 
• Foundation established and registered in Mauritius. 
• Natural persons applying for investment banking license. 

What is an Authorized Company in Mauritius?

• A corporation in which the majority of shares, legal and beneficial interest, are held and controlled by a non-resident, must apply to the Financial Services Centre for an authorization if it proposes to conduct principally outside Mauritius and has a central management and control outside of Mauritius. 
• An authorized company can only do the following

         – Banking

         – Financial Services

         – Holding or managing or otherwise dealing with a collective investment fund or scheme

         – Providing registered office facilities, nominee services, secretarial services, directorship 

           services, and other services for corporations. 

         – Providing trusteeship services through business. 

         – Any other activities allowed under the rules of the Financial Services Centre. 

• An authorized company is not considered a resident company for tax purposes and will not be taxed in Mauritius.
• It does not benefit from any double tax treaties that Mauritius contracted with other countries. 

Forming a Presence in Mauritius from Abroad

The most common options for foreign companies to establish a business in Mauritius are as follows:

• Subsidiary company 
• Registration with the Registrar of Companies as a branch of a foreign company. 
• Joint venture with a local company. 

An overseas company that wishes to operate or trade in Mauritius must register with the Registrar of Companies as a branch of the overseas company. Activities include:

• Establishing or using a share transfer office or share registration office in Mauritius. 
• Administration, management, and dealing with property in Mauritius as an agent, personal representative, trustee, whether through employees or an agent.
• An overseas company must reserve its company name one month after it begins carrying business in Mauritius, it must adhere to the following documents with the Registrar of Companies:

         – Authenticated copy of certificate of incorporation or registration. 

         – Duly authenticated copy of its constitution. 

         – List of shareholders, including name of beneficial owner and place of incorporation. 

         – List of names of its directors. 

         – Notice of the situation of its registered office in Mauritius. 

         – Declaration made by the authorized agents of the company. 

• Once all filing requirements are compiled with the Registrar of Companies will issue a certificate of registration to the foreign-owned company. 
• Foreign company must file an annual balance sheet, together with all required documents to be filed in the country of incorporation of the foreign company. 
• A foreign company may engage in transactions under its own name. 

Formalities of Setting Up a Joint Venture

• Can be established as an incorporated and unincorporated body. 
• Must be registered with the Registrar of Business under the Business Registrations Act of 2002 at least two days before proposed start of business operations. 

Formalities for Setting Up a Private Company 

• Company name must be reserved with the Registrar of Companies. 
• Once company name is approved, an application for incorporation can be submitted. 
• Once all requirements are met under the Companies Act 2001 and the prescribed fee is paid, the Registrar of Companies will issue a certificate of incorporation and enter the particulars of the company into the register of companies in Mauritius and give the company a unique company number. 

Formalities for Setting Up an Authorized Company 

• Applicant must submit an application form through a management company with the following requirements:

         – Cover letter

         – Signed declaration that an application is made with the knowledge of relevant 

           authorities.

         – Legal certificate confirming the application adheres to the laws of Mauritius. 

         – Diligence checks confirmation. 

         – Business plan

         – Due diligence documents, including CVs, passports, bank references, certificates of   incorporation, directors and

shareholders lists, beneficial owner name, constitution, and financial statements.

         – Applicable registration and processing fees. 

         – For a company with global business license, processing fee is EUR 450 and annual  license fee of EUR 1770. 

         – For an authorized company, processing fee is EUR 130 and annual license fee of EUR 318. 

• Incorporation with the Registrar of Companies is completed after approval is received by the Financial Services Centre. 

Company Financial Reporting Requirements

For companies

• Reporting must be within six months after the balance sheet date of the company. Financial reports must be submitted in accordance with International Accounting Standards. 
• The financial statements must be filed with the Registrar of Companies within 28 days of the date statements are signed together with auditors report.
• Must file an annual return within 28 days of the annual meeting. 
• Financial summary filing for small private companies with annual turnover not more than EUR 500,000. 
• Companies with global business licensed must file audited financial reports with the Financial Services Centre every year. 
• Authorized companies must file a financial summary with the Financial Services Centre every year. 

Branches of Overseas Companies

• Must file an annual balance sheet with documents that need to be filed in the country of incorporation of the foreign company. 

 Minimum Capital Requirements

• No minimum investment amount or minimum share capital requirement. 
• Company must have at least one share in issue, which can be issued at nominal value and cannot be redeemed. 

Mauritius Taxation Regime

Corporate Tax

• 15% flat tax rate. 
• Tax resident company can claim foreign tax paid on their foreign source income as a credit to the full extent against Mauritius tax in respect of that income can be evidenced. 
• Tax resident company is entitled to 80% exemption in respect to the following incomes:

         – Foreign source dividend, provided it is tax deductible in origin country. 

         – Interest derived by the company other than banks, non-bank deposits taking institution, and money changer.

         – Income derived by companies engaged in ship or aircraft leasing. 

         – Income derived from a collective investment scheme, close-ended fund, CIS manager, CIS administration

– Income derived from leasing and provision of international fiber capacity.

         – Income derived from the sale, financing arrangement, asset management or aircraft, & aviation advisory services. 

         – Interest derived by a natural person from money lent through peer-to-peer lending  platform. 

• A non-tax resident is taxable on income derived from Mauritius at a rate of 15%. 
• Company, where or not a taxpayer, must file an annual tax return declaring all its income derived during the preceding year, and pay all tax due no later than six months from the end of the month in which its accounting year ends. 
• Companies with a turnover of less than EUR 250,000 must make quarterly interim tax payments under its advanced payment system. 

Withholding Tax

• No withholding tax on dividends
• Interest paid by a natural person, to any person other than a company in Mauritius is taxed at 15% of gross amount of the interest. 
• No withholding tax on interest paid to a non-resident. 

Royalties

• Paid by any person other than an individual or global business license holding company to any other are subject to withholding tax at the following rates:
• 15% if paid to a non-resident
• 10% of paid to a resident

Royalty payable to a non-resident by a company out of its foreign source income will be exempt from tax. 

Capital Gains Tax

• No capital gains tax in Mauritius. 

Valued Added Tax

• Applicable to all goods and services. 
• Charged on taxable supplies of goods and services made in Mauritius by taxable persons in the course of furtherance of its business. 
• Payable on importation of goods in Mauritius, regardless of whether the importer is taxable or otherwise. 
• 15% VAT on taxable supply or 0% on zero-rated supplies. 
• Exported goods and services supplied to local market are zero-rated. 
• VAT assessed on registered person with an annual turnover of taxable supplies exceed EUR 250,000 must file monthly VAT returns and make payment required. 
• VAT registered person with annual turnover no more than EUR 250,000 must submit quarterly returns and make payments accordingly. 

Stamp Duty 

• Stamp duty is levied and paid to the Registrar General for the following items:

         – Document witness transfer pricing of properties – EUR 17

         – Copies of documents witness transfer of property for transcription – EUR 25

Tax Treatment for Residents and Non-Residents

Tax Resident 

• Income derived from Mauritius or elsewhere through business vehicles resident in Mauritius will be subject to tax, with certain exceptions. 
• A tax resident if a company is incorporated in Mauritius or if it has central management and place of administration in Mauritius. 

Non-Tax Resident 

• Income generated in Mauritius by business vehicles that are non-residents will be taxed in Mauritius.
• Non-resident companies will be subject with qualifying for relief under a double tax treaty between Mauritius and another country where the business vehicle is a tax resident. 

Tax Treatment on Dividends or Profits Remitted Overseas

• No existing tax repatriation of profits and capital in Mauritius. 

Thin Capitalization Rules

• No thin capitalization rules in Mauritius. 

Grants and Tax Incentives

• Investment incentives are applicable for both domestic and private investors. 
• Mauritius is a low-tax jurisdiction offering fiscal incentives such as the following:
  • Income tax rate of 15%. 
  • Companies engaged in goods exportation is taxed at 3%. 
  • 80% taxation in relation to specified foreign source income, provided relevant purpose 
  • requirements are met by a company.
  • 100% foreign ownership is permitted in certain circumstances. 
  • No minimum foreign capital requirement. 
  • No tax on dividends distribution.
  • No capital gains tax. 
  • Free repatriation of capital, dividends, and profits. 
  • Accelerated depreciation on the acquisition of a plant, equipment, or machinery. 
  • Exemption from customs duty on equipment. 
  • Direct cash incentives for employers involved in training and recruitment. 
  • Enhanced investment tax credit for investments in the textile sector. 
  • Extensive network of double tax avoidance treaties. 

If you are planning on establishing a company in Mauritius, our global service network at Damalion will expertly guide you from start to finish. Our team will provide you with sound advice on the appropriate business that fits your needs. Setting up a business in a foreign country such as Mauritius doesn’t have to be challenging. We will provide you with recommendations on crucial activities, including registration, incorporation, bank account opening, management, accounting, and understanding the prevailing tax regimen, among many others. To learn more, reach out to a Damalion expert today. 

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.