Mauritius GBC 1

Doing Business in Mauritius

Mauritius GBC 1 Company (Tax Resident – Treaty Access)

Overview

Mauritius GBC 1 Companies are resident in Mauritius and consequently subject to tax. However, they benefit from both tax credits and a longstop tax rate of 3%. Correctly structured and managed Mauritius GBC 1 companies may access Mauritius’ network of 37 tax treaties. Neither capital gains nor withholding taxes are levied. Consequently, Mauritius GBC 1 companies are used by tax practitioners and businesses to structure investments into Mauritius’ treaty partners, which includeChina, India, Luxembourg and Thailand.

Mauritius GBC 1 Companies are governed by The Companies Act, 2001 and regulated by the Mauritius Financial Services Commission. They are subject to compliance and reporting regimes similar to those of Hong Kong or UK companies.

All companies seeking to benefit from this status are granted licenses on a case by case basis by the regulatory authorities in Mauritius. This procedure demands the submission of a detailed business plan and disclosure of beneficial ownership. Normally it takes about three weeks to set up a Mauritius GBC 1 Company.

Introduction

Mauritius is situated in the Indian Ocean approximately 800 km off the East Coast of Madagascar.

Population

The population of the Island is approximately 1,200,000 made up principally by people of European, African, Indian and Chinese origin. Mauritius takes pride in the fact that these different cultures co-exist in peace and succeed in creating a cultural entity that is distinctly Mauritian.

Political Structure

The British ruled Mauritius for 158 years until 12 March 1968 when it became an independent country within the Commonwealth. The Republic of Mauritius is a Westminster style democracy. The President is the Head of State and Commander in Chief. Full executive power rests with the Prime Minister who is Head of Government. The Members of Parliament are elected every five years by popular vote and a number of political parties contest the elections, reflecting the country’s firm commitment to a multi-party political system.

Infrastructure and Economy

Since independence in 1968, Mauritius has developed from a low income, agriculturally based economy to a middle-income diversified economy with growing industrial, financial, and tourism sectors. For most of the period, annual growth has been of the order of 5% to 6%. The government’s development strategy centres on foreign investment. Mauritius has attracted more than 20,000 offshore entities, many aimed at commerce in India and South Africa, and investment in the banking sector alone has reached over US$ 1 billion.

Language

English is the official language. However, the Mauritian population is largely bilingual, being equally fluent in English and French. Creole is also spoken and understood by everyone.

Currency

Mauritian Rupee.

Type of Law

Common Law for corporate matters.

Company Formation

Principal Corporate Legislation

The Companies Act 2001.

Financial Services Act 2007.

A Company holding Category 1 Global Business License is resident for tax purposes and can access Mauritius’ network of double tax treaties, provided that it is correctly structured and that the seat of management and control is in Mauritius.

Procedure to Incorporate

Once name approval has been obtained, three copies of the Constitution are submitted, together with a notice of the First Directors, Secretary and location of the Registered Office, and consent forms signed by the Officers.

Restrictions on Trading

A licence is required to undertake banking or insurance business or solicit funds from the public.

Powers of Company

A company incorporated in the Republic of Mauritius has the same powers as a natural person.

Language of Legislation and Corporate Documents

The legislation is in English and French whilst documentation may be expressed in any language but must be accompanied by a certified English translation.

Registered Office Required

Yes, must be maintained in Mauritius at the address of a licensed management company or law firm.

Language of Name

English or French.

Time to Incorporate

Three to four weeks.

Name Restrictions

Any name that is identical or similar to an existing company or any name that suggests the patronage of the President or the Government of Mauritius.

Names Requiring Consent or a Licence

The following names or their derivatives: assurance, bank, building society, Chamber of Commerce, chartered, co-operative, government, imperial, insurance, municipal, royal, state or trust or any name which in the opinion of the Registrar suggests the patronage of the President or the Government of Mauritius.

Suffixes to Denote Limited Liability

Limited, Corporation, Incorporated, Public Limited Company, Société Anonyme, Société Anonyme à Responsabilité Limitée, Sociedad Anَnima, Berhad, Proprietary, Naamloze Vennootschap, Besloten Vennootschap, Aktiengesellschaft or the relevant abbreviations.

Compliance

Usual Capital

The usual authorised share capital is US$ 1 million with all of the shares having a par value. The minimum issued share capital is one share of par value.

Classes of Shares Permitted

Registered shares, preference shares, redeemable shares and shares with or without voting rights.

Tax Situation

Provided that the Company holding a Category 1 Global Business License owns at least 5% of an underlying company, credit will be available on foreign tax paid on the income out of which the dividend was paid (“underlying foreign tax credit”). When a company not resident in Mauritius, which pays a dividend, has itself received a dividend from another company not resident in Mauritius (a “secondary dividend”) of which it owns either directly or indirectly at least 5% of the share capital, such dividend will be allowable as a foreign tax credit and an underlying foreign tax credit will also be available.Mauritius has no thin capitalisation rules.

Interest and royalty payments paid by Companies holding a Category 1 Global Business License are fully tax deductible in Mauritius. Tax sparing credits are available – Under this regime the effective rate of taxation in Mauritius can be reduced as a long stop provision exists whereby Companies holding Category 1 Global Business License may elect not to provide written evidence to the Commissioner showing the amount of foreign tax charged and enjoy deemed taxation at 80% of the normal rate of 15%, i.e. 12%. Thus, use of this long stop provision in isolation would reduce the effective rate of taxation in Mauritius from 15% to 3%.

Taxation

Companies pay a fixed annual licence fee of US$ 1,750 and a one-off licence application fee of US$ 500 to the Financial Services Commission. On incorporation a once-off fee of US$ 325 is payable to the Registrar of Companies for private companies. Thereafter a further US$ 325 is payable annually for private companies. Companies are resident in Mauritius for tax purposes. There is no capital gains taxation in Mauritius and there are no withholding taxes on the payment of dividends.

There are no stamp duties or capital taxes. Companies holding Category 1 Global Business License are liable to taxes at a rate of 15%. 

Double Taxation Agreements

Mauritius has an extensive double tax treaty network which includes treaties with the following countries: Belgium, Botswana, China, Croatia, Cyprus, France, Germany, India, Italy, Kuwait, Luxembourg, Madagascar, Malaysia, Mozambique, Namibia, Nepal, Oman, Pakistan, Rwanda, Singapore, South Africa, Sri Lanka, Swaziland, Sweden, Thailand, Uganda, UK and Zimbabwe.

Financial Statements Required

Audited financial statements must be filed with the Financial Services Commission.

Directors

Companies holding Category 1 Global Business Licenses require a minimum of two Directors who must be natural persons resident in Mauritius.

Company Secretary

A qualified resident company secretary must be appointed.

Disclaimer
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. IQTESADI does not accept any responsibility, legal or otherwise, for any errors or omission.