By Dr Ludovic C. Verbist, Ph.D., LLM, TEP, Managing Director, AAMIL Group, and Melanie Goodman (UK Solicitor), Business Development Manager, AAMIL (Swiss) S. A. (18/09/2017)

“No nation was ever ruined by trade” Benjamin Franklin

As 2017 canters towards the half-year mark, it is a fitting moment to stop and reflect. The last 12 months have been a time of notable developments in Mauritius: in politics, with the succession of his father, Sir Anerood Jugnauth, by Pravind Kumar Jugnauth in January 2017, and in the economy, with changes that include the recent amendments of the Double Taxation Agreement (DTA) with India, and the effects of a rapidly growing real estate market.

This article will highlight the principal alterations to the legislative framework, the promotion of environmental issues and the security of international relations, which are increasingly stimulating the interest of investors and the real estate market in this jurisdiction.

Legislative Changes

Changes brought by the Finance (Miscellaneous Provisions) Act 2016

The Finance (Miscellaneous Provisions) Act 2016 was approved by Parliament and came into force on 7 September 2016.  The main changes brought to applicable legislations, as pertinent to international trade and industry, are summarised below.

A. Income Tax Act (ITA)

Going forward, when declaring its revenue to the Mauritius Revenue Authority (MRA) in its yearly income tax return, any company can draw the attention of the MRA if it has any doubt regarding the tax treatment of any reported transaction. This will indemnify the company against penalties and/or interests arising, should the MRA hold a different view and subsequently raise a query.

B. Financial Services Act 2007, as amended

Of particular interest to service providers is that, going forward, any change in legal or beneficial ownership of entities holding financial services licences will require notification only, and not the prior approval of the Financial Services Commission (FSC). One should note that prior approval will still be required if such a change leads to a change in the control of the entity.

Increasing flexibility is portrayed by a) the fact that companies holding Category 2 Global Business Licences will now be able to invest in shares or other securities listed on the Stock Exchange of Mauritius, or other exchanges operating in Mauritius, and b) a new category of licence, the Global Legal Advisory Services licence, has been introduced in the Financial Services Act 2007 for foreign law firms who wish to provide legal services in Mauritius pertaining to global business, international arbitration, corporate law, taxation law, international law and foreign law. 

C. Securities Act

A new type of licence, the Corporate Finance Advisory Licence, has been introduced for entities wishing to engage in the provision of advisory services regarding:

a) Compliance with the listing requirements of any securities exchange;

b) Raising of funds through the issue of securities;

c) Arrangement or restructuring, including takeovers, mergers and acquisitions; and

d) Any other matter specified by the FSC.

D. The Code of Corporate Governance for Mauritius (2016)

Following its launch on 13 February 2017, the new Code of Corporate Governance for Mauritius provides a set of principles and guidance aimed at improving the governance practices of organisations within Mauritius.

The Code recognises that scandals arising from poor governance that impact upon public interest entities should primarily be dealt with by legislation.  It aims to encourage high-quality corporate governance with inbuilt flexibility that allows organisations to adapt their practices to their particular circumstances.

E. Budget speech June 2017

As far as the global business sector is concerned, the latest budget wishes to increase the criteria to be followed in terms of substance, i.e. mainly employment of an employee and rental of offices. This should be enacted later this year.

Going Green

The French Development Agency (Agence Française de Développement – AFD), has reaffirmed its commitment to provide both financial and technical support for the development and promotion of green infrastructure projects in Mauritius.

In a statement, Mr Jérémie Pellet, AFD’s CEO, recalled the existing bilateral partnership between Mauritius and his agency. He expressed an interest in strengthening collaboration with the renewable energy and sustainable development sector, as well as facilitating the regional integration of Mauritius in the Indian Ocean, with emphasis on consolidating cooperation with Reunion Island in the economic sector.

It has been recognised that for local Mauritian companies to grow they must explore new channels in Africa. This has been the stimulus behind the multiple treaties and agreements with African states.

Double Taxation Agreements and Investment Promotion and Protection Agreements with Africa

Mauritius has established a network of agreements comprising 23 signed Investment Promotion and Protection Agreements (IPPAs) and 20 signed DTAs with African States.  A shining example of the already strong relationships is the fact that there are currently 117 Mauritian companies across 24 countries in Africa, the latest being the State Bank of Mauritius acquiring the Fidelity Commercial Bank of Kenya and injecting around MUR510million (US$15million) as additional equity. 

Furthermore, the Mauritius Board of Investment (BOI) has signed 31 Memoranda of Understanding (MoUs) with African countries. In 2016, nine African investment promotion agencies visited the BOI to learn from the Mauritian investment promotion experience.

As the movement gained momentum, the government launched the Asia-Africa Air Corridor initiative and signed government to government agreements with Senegal, Ghana and Madagascar, to develop special economic zones (SEZs) in these countries. 

The Mauritius Africa Fund (MAF) was established as a vehicle to generate funds for the development of SEZs with BOI’s Outward Investment Cluster responsible for their promotion strategy.

To further boost economic relations with other countries, the government is in the process of negotiating joint commissions with selected countries, namely Reunion Island, South Africa, Kenya and Ethiopia. These will provide the mechanism for promoting trade and investment through the removal of trade barriers, sharing of technology, improving the business environment and formulating necessary structures for common projects. Also, as stated in the 2016–2017 budget, economic counsellors will be posted in three African cities to promote trade and investment.

In line with these efforts to become the financial centre for the African continent, Mauritius has waved all visa requirements for nationals of nearly all African countries. Any such person can enter Mauritius for a period of two months, on a renewable basis.

Increasingly, Mauritius is used as a platform by multinationals to invest in Africa, setting up a local holding company, usually a Category 1 Global Licence Company(GBL1) in the process. GBL1s are resident companies, needing to establish substance, having access to DTA, and paying a corporate tax rate of between 0 and 15 per cent

However, the implementation of DTAs to strengthen international ties is not limited to Africa.

Strengthening Ties with China and India

The Minister of Foreign Affairs for Regional Integration and International Trade, the Hon. Seetanah, attended the Belt and Road Forum for International Cooperation, which took place in Beijing last May. He spoke at a thematic session on trade facilitation. During his speech, he stressed the urgency of improving connectivity in Africa.  It was agreed that the Beltway and Route Initiative could help boost trade and the global economy. Mauritius, as part of this initiative, can play an important role as a meeting and connecting place between China and Africa, and in the realization of projects of common interest between these two regions.

Chinese companies have expressed a strong interest in investing in Mauritius in various fields, such as pharmaceuticals and financial services.

A Memorandum of Understanding was also signed on 16 May 2017 between the BOI and the China Council for the Promotion of International Trade (CCPIT), setting the framework for closer collaboration between the two institutions for investment promotion.

India has taken the bold move of announcing a US$500 million line of credit to Mauritius and has also signed an agreement with the country for maritime security cooperation.

The prime minister of India, Narendra Modi, stressed that India and Mauritius agreed to further strengthen their wide-ranging cooperation in hydrography for a secure and peaceful maritime domain. He cited in particular India’s inspiration in the field of the aforementioned green issues, noting especially the signing and ratification of the framework agreement on International Solar Alliance.

In summary, the augmentation in global DTAs has been accelerated by corporates as Mauritius offers:

•           An attractive fiscal regime.

•           Tax free dividend and no capital gains tax.

•           Free repatriation of profits, dividends and capital.

•           100 per cent foreign ownership.

•           Tax exempt Global Business Companies Category 2 and Global Business Companies Category 1 with a maximum effective tax rate of 3 per cent.

•           A vast network of DTAs, the latest being those signed with Jersey and Ghana in March 2017.

•           OECD white-listed jurisdiction.

Rapid Real Estate Market Expansion

No review of the business environment in Mauritius would be complete without a glance towards the flourishing real estate market, which is expected to continue its growth.

Stock exchange-listed real estate investment trust, Johannesburg Mara Delta, acquired a 50 per cent interest in three hotels previously owned by  New Mauritius Hotels Ltd. In October 2016, Mara Delta acquired the Tamassa Resort for US$40 million in Bel Ombre, southwestern Mauritius, through a sale and leaseback agreement.

With an economy based on tourism and financial services, Mauritius is considered a model of stability. It has one of Africa’s highest per capita incomes, solid ownership rights and a free and independent media. It is rated as one of the top five prime property locations in sub-Saharan Africa according to the New World Wealth Mauritius Investment Review.

By the end of 2015, there were 3,200 U.S. dollar millionaires living in Mauritius – a population 1.3 million – with a combined net worth of US$12 billion. Approximately two thirds of these high net worth individuals come from France and Southern Africa. 

Low domestic tax rates of 15 per cent, a thriving financial services sector, ease of doing business and an idyllic environment of ocean and mountains all contribute to an enabling environment for investment, Africa Property News reported.

With a minimum investment of US$500,000 in selected real estate developments, foreigners can obtain residency in Mauritius.

The leading question is therefore, why are the world’s elite drawn to this jurisdiction above other well-known vacation playgrounds? Answers would include:

•           Low levels of government regulation.

•           Residents are free to invest overseas with no exchange controls.

•           It has a well-developed stock exchange and banking system.

•           Ease of business.

•           Enhanced privacy and confidentiality.

•           Offshore asset protection.

•           Reliable banking and telecommunications systems.

•           Social and political stability.

•           Convenient time zone.


This is a country that exhibits all the key ingredients that attract the keen investor: economic diversity, a highly completive tax regime, investor-friendly regional trade and tax arrangements built on the solid foundations of democracy, an independent judiciary and a global reputation for transparency. In the current climate of unpredictability, Mauritius represents an island of stability and reliability.