Mauritius: Going from Strength to Strength as an International Business Centre

The Republic of Mauritius is a sovereign democratic country with a booming economy and an impressive track record. Since its independence in 1968, it has performed remarkably and is continuing its economic growth thanks to the development of strong tourism and financial services industries.

The island is currently ranked twenty-fourth out of 181 countries in the World Bank’s Doing Business 2009 survey and is the premier African country in terms of business-friendly regulations. This bodes favourably for any foreigner interested in using Mauritius as a platform for international business or to acquire immovable property in the most exquisite locations of this paradise island.

The Offshore Sector

The offshore sector was launched in 1992 and has since known a sustained growth, while at the same time embracing the highest international standards; it has now matured to become a major pillar of the Mauritian economy. The non-banking offshore industry allows for the creation of offshore entities, such as trusts and ‘global business’ companies, which can be used by non-residents to undertake any lawful activity outside Mauritius.

The advantages of Mauritius are various:

• precise and permanent legal, judicial and administrative framework;
• political stability;
• strong supervision of the financial services sector;
• the country is not blacklisted by the Organisation for Economic Co-operation and Development (OECD), or by the Financial Action Task Force (FATF);
• strategically located so as to allow communication with mainland Europe and the Far East during working hours;
• highly skilled bilingual (English and French) workforce;
• long-term commitment and strong governmental support to the financial services sector;
• excellent telecommunications infrastructure;
• 34 Double Taxation Agreements (DTA) and 18 Investment Promotion and Protection Agreements (IPPA);
• part of, and a leading member of, regional governmental ‘blocs’, such as the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and the Indian Ocean Rim Association for Regional Co-operation (IOR-ARC);
• a large part of the economy is involved in international trade (import and export) and Mauritius is a favoured commercial hub between Asia, Africa and Europe.

These advantages are but a named few.  

Global Business Licence Companies

Any non-resident wishing to set up a company under the Mauritius laws, but not active within the island, must incorporate a global business company. It will either hold a licence Category 1 (GBL1) or 2 (GBL2) issued by the Financial Services Commission (FSC). GBL1 and GBL2 are governed by the Companies Act 2001 and by the Financial Services Act 2007.

Below are some of the common features of GBL1 and GBL2:

• company limited by shares, by guarantee or by both shares and guarantee (hybrid);
• nominee shareholders allowed;
• no minimum capital requirements;
• capital may be denominated in any currency;
• constitution in English or French, or in any language, but then with the English translation attached;
• no capital gains tax, no withholding tax on dividends and interests paid to non-residents;
• use of the words limited, corp, BV, NV, SA in the name;
• one shareholder allowed;
• continuation from and to another jurisdiction possible;
• short incorporation period;
• low incorporation and operational costs; and
• total business confidentiality.

GBL1

A GBL1 resident in Mauritius is subject to tax and can thus benefit from the 34 DTAs Mauritius has established. It is ideally suited for investments in DTA-related countries and which are likely to generate a flow of income in future years, be it as dividends, interest, royalties or capital gains. Over the years, the GBL1 has proved to be a vehicle of choice for investment in countries such as China, India, Luxembourg or South Africa and all those with whom Mauritius has a favourable DTA.

A GBL1 can be incorporated locally or can be registered as a branch of a foreign company. Public companies, insurance companies, protected cell companies, investment funds and other ‘businesses of substance’ can be set up in Mauritius within 7–15 days as GBL1.

GBL1 are governed by the Income Tax Act, 1995, under which they are taxed at the flat rate of 15 per cent. Mauritius law allows an underlying foreign tax credit, equal to the amount of foreign taxes paid, up to the amount of tax due in Mauritius. In such a case, generally no further tax is due in Mauritius. In the absence of proof, the amount of foreign tax paid is presumed to be 80 per cent of the Mauritius tax. The effective tax rate for a GBL1 can thereby be reduced to 0 per cent, or up to a maximum of three per cent.

GBL2

A GBL2 is a private company which is used to conduct business outside Mauritius. It can be set up very quickly and easily (within five days) and its subsequent administration is simple; there are few statutory and filing requirements. A GBL2 is equivalent to the International Business Company (IBC) available in other offshore jurisdictions such as the British Virgin Islands and the Seychelles.

A GBL2 is ideally suited for asset holding, trading and invoicing, international investment, e-commerce and shipping, among others. Its activities are restricted to non-residents (except for dealings with banks and professionals) and beneficial ownership details are not disclosed to the authorities.

GBL2 are not subject to any tax.

Trusts

Trusts in Mauritius can be set up by residents and non-residents. The governing legislation is the Trusts Act 2001: a modern piece of legislation incorporating the most salient features of international trust law and practice, coupled with some unique features.

Mauritius trusts are usually used for: wealth and estate planning; protecting assets from creditors; to postpone the time of vesting of property; to pass on to trustees the decision of who receives the trust income or the trust capital; and to enable the settlor to choose professional persons to administer and pass on assets according to his wishes.

Different types of trusts can be set up:

• trusts with interest in possession;
• charitable trusts;
• purpose trusts;
• accumulation and maintenance trusts;
• bare trusts;
• protective trusts;
• discretionary trusts;
• employee benefit trusts; and
• trusts for the disabled, among others.

Discretionary trusts have proved to be very popular with non-residents, due to the optimum flexibility they offer in the organisation of the trust property and for the distribution of income to beneficiaries.

The main advantages of a Mauritius trust are, as per the Trust Act 2001:

• The settlor can also be a beneficiary, but he cannot be the sole beneficiary of the trust of which he is the setttlor.
• The settlor can also be a trustee, provided that at least one trustee is a qualified trustee, such as AAMIL Trustees Ltd.
• There is no mandatory registration requirement of the trust deed.
• Trustees are not required to disclose any (confidential) information to any person not entitled to it, nor can they be required to divulge any such information, except upon court order – confidentiality is thus guaranteed.
• There are no forced heirship rules.
• A letter of wishes or memorandum of wishes can be prepared.
• There is provision for the office of the protector of the trust in order to add an additional layer of protection for clients from civil law countries, who might not be comfortable with the trust concept of ‘giving away’ ownership rights over their property to third parties.
• There is provision for the offices of custodian and managing trustee, for example, to facilitate the migration of trusts – managing trustees can be replaced without the need for the trust property, held with the custodian trustee, and which may be substantial or complexly arranged, to be vested in new trustees.
• The duration of a trust, other than a purpose trust, shall not exceed 99 years

A non-resident trust is exempt from any tax in Mauritius. This pertains to a trust of which the settlor is a non-resident and all the beneficiaries are also non-residents, and for which a yearly declaration of non-residence is deposited with the local tax authority. Non-resident beneficiaries of a trust are exempt from tax on income in respect of income under the terms of the trust, as well as from value-added tax, whereas resident beneficiaries having received such income will be taxed at a flat rate of 15 per cent.

Mauritius resident trusts are taxed at 15 per cent on their income, meaning the gross income less expenses, but before any distribution. They are also eligible for an 80 per cent presumed foreign tax credit on foreign source income and are entitled to tax treaty benefits, under the various DTAs in force.

Private Trust Companies

Private Trust Companies (PTCs) in Mauritius can act as trustee for trusts set up by individuals for the benefit of a single family. The PTC is a highly attractive estate planning tool. It allows individuals and families to retain a larger degree of control than possible under straight trusts. A PTC cannot act as trustee by way of business, i.e. to the public in general. It can operate under the form of a GBL1 or GBL2.

The granting of a GBL2 licence to the PTC is unique in the offshore landscape in the sense that its cost of operation in the Republic of Mauritius is low, it is tax exempt, and there is no obligation to have local directors, or to file accounts.

There is no public register of directors and shareholders of the PTC, nor mandatory registration of the individual underlying trusts, so confidentiality is guaranteed.

Such PTCs are notably cheaper and easier to run than in other jurisdictions.

Purchasing Real Estate in Mauritius

The Integrated Resort Scheme

The Integrated Resort Scheme (IRS) enables non-residents to acquire a home in Mauritius – luxury villas of international standing with high-class amenities and facilities in an approved resort – and to become residents. These villas are located in cherry-picked exotic areas and have mushroomed around the island since the launch of the IRS a few years ago. For the privileged few, beachfront villas overlooking the Indian Ocean are also available.

The minimum purchase price for an IRS villa is set at US$500,000. As long as the property is held by the non-resident, either in his own name or under the name of a Mauritius company or trust, he will be granted permanent residency status in Mauritius, together with members of his family.

The Real Estate Scheme

The government of Mauritius has devised an alternative real property acquisition scheme in 2007 – the Real Estate Scheme (RES). Under this scheme, small landowners may develop villas with a price tag below the US$500,000 threshold on no more than 10 hectares of land. However, the non-resident purchasing property under the RES will not be granted resident status.

Dr Ludovic C. Verbist
PhD, LLM, TEP, Managing Director of AAMIL (Mauritius) Ltd. Ludovic has contributed to a number of articles and interviews, including: Prudence et Préservation du Capital - Business Magazine (October 2017); Guaranteed Real Estate Investment – Cap Sur Maurice Magazine (October 2018); Luxury Property Market in Mauritius – Cap Sur Maurice Magazine (October 2019); Vendre Maurice comme une destination refuge – Le Mauricien Newspaper (May 2020); Jouer à fond la carte africaine dans l’ère post-Covid-19 – Business Magazine (May 2020); Global Business « Désamorcer la Bombe » - Business Magazine (June 2020); Liste Noire – La bataille se jouera sur le terrain diplomatique - Business Magazine (July 2020); Interview – « Parlons économie » - Radio Lac (October 2020); «Maurice face à la menace d’un maintien prolongé sur la liste noire » - Business Magazine (February 2021).