We have attempted to provide some information on what options people have for company formation and registering businesses in Mauritius, including both offshore companies and domestic companies. We try and go through a few of the benefits of the jurisdiction, the different options there are, and points to consider along the way. This is neither meant to be exhaustive nor detailed and is not to be relied upon other than for general information purposes.
Advantages of Mauritius
Mauritius packs quite a punch for a small island. Significant amounts of Foreign Direct Investment have headed to India and China, and now to Africa, using Mauritius as its conduit. There are many reasons for this. In short, there are Double Taxation Avoidance Treaties (DTA) and International Promotion and Protection Agreements (IPPA) with the countries that the company or fund are to invest in. The first of these, amongst other benefits, limits the withholding tax and tax on dividends amongst other taxes, and the second provides protection to the investment that it would not be possible to do if one did not base the company in Mauritius. The tax regime in Mauritius is flat at 15% for corporate and income tax, but with most structures and funds, this can be reduced to 3% or even 0%. The population is bilingual, highly educated, and the stability of the country defies much of the rest of Africa.
Types of Companies in Mauritius
Despite there being much information online regarding GBC 1 and 2s, (Global Business Companies), it is not possible to create either of these offshore companies anymore. Existing ones have special rules grandfathering some of their benefits for a while yet, but we are left with three options for companies in Mauritius if one wants to set up a new Mauritian company.
1 – Domestic Companies
These are local companies, primarily for doing business in Mauritius. They are very similar to any company from the UK, Australia or New Zealand, with the Companies Act having most of the same rules. These companies can be owned by foreigners. Practical instances of foreigners using these are generally for when the company will concern Mauritius in its operations. For example, they are often used when someone is on an investor permit and they are undertaking much of their development of investment in Mauritius. They are sometimes used to purchase Mauritian property to avail many of the benefits. Business registration is quick for domestic companies and the costs are low. There will need to be one resident director. These do not require a management company.
2 – Global Business Licences
There is now only one Global Business Licence as of January 2019. This is similar to the old GBC 1, but with different substance requirements and different tax consequences. There are more onerous conditions to qualify as a Global Business Company (GBC). The GBC is now taxed at 15%, but instead of the old deemed foreign tax credit of a GBC1, there is now a partial tax emption of 80% for certain income. This brings tax of the entity down to 3% for a structure that is properly set up. There still need to be 2 directors resident in Mauritius, whom are generally provided by the management company. These companies normally take 2-4 weeks to set up including a bank account. If other Mauritian licences are needed during the business registration process, such as Investor Dealer Licences, Investor Advisor Licences, Payment Service Provider Licences (Payment Intermediary Service Licence in Mauritius) or Collective Investment Scheme Licences (Fund Licences), then these other licences will delay the process significantly.
3 – Authorised Companies
The other offshore company is the authorised company. This is not resident in Mauritius for tax purposes, and therefore cannot utilize many of the benefits of using Mauritius such as the DTAs and the IPPAs. The tax is therefore 0% and this is the equivalent of the old GBC 2, an offshore Mauritian company. The directors need to be outside Mauritius so you need to make sure that whichever management company you are dealing with has a good partner in another country to provide these directors. Authorised companies are somewhere between the domestic companies and GBCs in terms of cost and timeframes to set up.
Management companies are corporate service providers that assist with the set up and administration of offshore companies in Mauritius. They are licensed by the Financial Services Commission (FSC), who are the regulators for the financial sector here, other than banking. For when there is insufficient regulation in an area, such as in FinTech, then the Economic Development Board, amongst other, is involved. Management companies vary greatly in terms of their size, competence and global reach. The fees that the client pays by coming through us are some of the best value around as the management companies we work know that we get multiple quotes, and the service level they provide is high as we give them numerous clients. Importantly also, when a client needs a global solution, or a particular area of expertise such as FinTech, then this requires us to use specific management companies and service providers for different clients and their specific needs, which we can guide you through.
You will need advice and guidance as to what company and structure to choose as you want to be tax-efficient but within the law. TBI works with the most reputable management companies, accountancy firms, lawyers and banks as well as with the FSC, EDB and Registrar of Companies, to provide a one-stop shop in Mauritius for your business setup and beyond. We act as a partner that the client can trust, and as an introducer to make sure that the right service providers with the necessary competence are giving the client both quality work and value.
About the Author
Philip Tsalikis is a practising UK barrister based in Mauritius and registered there as a foreign lawyer. He is the founder of TBI Mauritius, a consultancy firm based in Mauritius but with a global reach and network. TBI assists individuals and businesses with their investment, setup and operations in Mauritius, and throughout Africa.
Our aim with our articles is to make them digestible. We keep them short and relevant but do not update them. They are not designed to be legally relied upon. This article contains no legal, tax or financial advice, all of which should be sought from relevant professionals.