Mauritius is strategically located in the South West Indian Ocean. The population of this island of 720 square miles comprises a medley of all races, ethnic backgrounds and cultures and is in many ways a living reflection of East meeting West.

Political Stability

Mauritius has a long standing democratic tradition of stability and respect for the rule of law which dates back to before its independence from Britain in 1968. The Government is firmly committed to economic growth and all major political parties have acknowledged the importance of promoting the financial services sector as a major source of national income.

International Finance Centre

In 1989, Mauritius launched its International Financial Services Centre by introducing legislation allowing international banks to establish offshore units. Other laws were passed in the succeeding years to provide for the creation of a variety of offshore structures. At present these include international companies, offshore companies, trusts and investment companies. There are also special provisions for a series of activities ranging from offshore banking and insurance to aircraft and ship registration.

Regulatory Body

Under the Mauritius Financial Services Development Act 2001, the regulating authority with regard to offshore matters is the Financial Services Commission (“FSC”). It is expeditious and efficient in approving applications to incorporate companies in Mauritius. The FSC has also been careful not to forsake standards in satisfying the flexible demands of offshore customers whilst protecting the investor and preserving the excellent reputation of Mauritius as an International Financial Services Centre.

Company holding a category one business license (GBL1)

General

A GBL1 company cannot transact business in Mauritian Rupees or with Mauritian residents unless authorised by the FSC.

Corporate structure and administration

The directors may exercise all such powers of the company that are not reserved to the shareholders under the act, in the constitution or in a unanimous shareholders agreement. GBL1 companies can obtain a tax residence certificate and take advantage of the Mauritius double taxation treaty network. In order for a GBL1 to be eligible for double taxation agreement benefits, it must be liable to taxation in Mauritius by reason of having its “place of management and control” in Mauritius. The board of directors shall consist of at least two residents to satisfy the requirements to obtain a tax residence certificate. Also, all meetings shall be initiated and chaired from Mauritius and all financial transactions channelled through bank accounts in Mauritius.

A GBL1 company is required to file audited financial statements within 6 months of its financial year end, with the FSC.

Taxation

A GBL1 company is liable to taxation in Mauritius but at a rate of 15% instead of the 25% rate applicable to domestic companies. However, a GBL1 company is entitled to a deemed tax credit of 80% or may opt to claim credit for actual tax suffered in another jurisdiction, if it’s more favourable. The effective tax rate is low with a benefit of obtaining a tax residency certificate.

Company holding a category two business license (GBL2)

General

A GBL2 company cannot transact business in Mauritian Rupees or with Mauritian residence.

There is no requirement for a general meeting to be held. The directors may exercise all such powers for the company that are not reserved for the shareholders under the act, in the consitution, or in a unanimous shareholders agreement. The board of directors shall consist of one of more persons who may be individuals or companies, and who need not be resident.

A GBL2 need not have its accounts audited and accounting records required are those which the directors consider necessary to reflect the financial position of the company.

Taxation

All the income of a GBL2 is exempt from tax in Mauritius.

The double taxation treaty signed with India in 1983 has been particularly successful in attracting investors into India through Mauritius offshore vehicles.

Why Mauritius?

The legislation for offshore companies is mostly subject to the provisions of its 1948 UK Companies Acts. A few administrative relaxations have been effected to suit the particular exigencies of the fast world of international finance. By the same token, in an endeavour to provide incentives to offshore investors, certain provisions of the domestic laws have been waived.

Consequently, the most obvious benefits being offered by the offshore sector can be summarised as follows:

1.   Secrecy and confidentiality are guaranteed by law with regard to all information submitted to the FSC.

2.   There is no exchange control restriction and profits can be freely repatriated.

3.   There is no withholding tax on dividends, interest and royalties.

4.   There is no inheritance tax

5.   There is no compulsory participation of local investors in offshore companies.

Double Taxation Treaties

Over 20,000 offshore and international companies have been registered in Mauritius, including 45 offshore investment funds.

However, unlike many ‘tax havens’, Mauritius has been careful not to confuse quantity with quality. 

The FSC vigilantly ensures that Mauritius does not become associated with money laundering operations and tax evasion. In this respect, the mainstay of the Mauritian offshore industry has been the application of a number of double taxation treaties which Mauritius has signed with other countries. Mauritius has made optimal use of its cultural and historical links with countries such as India, Pakistan, China, South Africa, France and The United Kingdom, to negotiate particularly interesting terms aiming to encourage multinationals and big investors to use the Mauritius route as a means of acceding to beneficial tax reductions under the treaty.