Mauritius *

Mauritius is a politically stable jurisdiction and the largest international financial and business hub in the Indian Ocean region with a strong liberal economy, a reputable banking system and a wide offer of qualified professional services.

Its pro-business and flexible regulatory framework provides reliability and security for the incorporation of international companies.

Under the Companies Act, 2001 and the Financial Service Act 2007, companies may apply for a Global Business License (GBL) that allows them to carry out Business outside the jurisdiction and benefit from an advantageous tax regime.

Companies holding the Global Business License may only undertake activities set out in the Business Plan filed with the Financial Services Commission (FSC) at the time of application for a license or as amended and notified to the FSC.

GBL companies may conduct financial services activities such as banking, insurance, assurance, reinsurance, fund management, collective investment schemes, trust management, trusteeship business provision if the relevant license is obtained.

GBL companies may benefit from an advantageous tax regime and a broad network of double taxation treaties.

The Finance (Miscellaneous Provisions) Act 2018 has brought new enhanced substance requirements for Global Business Corporations (previously GBC1 companies).

Licensing conditions require GBC companies to employ directly or indirectly, a reasonable number of suitably qualified persons to carry out the core income-generating activities, and have a minimum level of expenditures in Mauritius proportional to the level of its activities.

For example, investment holdings will be required to have annual expenditures in Mauritius of at least USD 12,000, whereas non-investment holdings will require USD 15,000 of expenditures and 1 employee if annual turnover is less than USD 100 million or 2 employees if annual turnover is more than USD 100 million.

Other activities such as fund management will require annual expenditures of USD 30,000 and from 1 to 3 employees in Mauritius depending on the amount of assets under management. Financial Institutions such as Insurance, Leasing or Credit finance, intermediaries such as investment advisors, insurance brokers and agents, and other financial services will also be required to spend a certain amount per year in Mauritius and have from 1 to 3 employees depending on their level of activities.

Global Business Companies holding and exploiting IP rights will be required to prove that they have incurred the appropriate research and development expenditure to meet the substance requirements.

With respect to the taxation of GBL companies – the previous Deemed Foreign Tax Credit (DFTC) regime has been abolished. Previously, GBC1 companies were eligible for a unilateral foreign 80% tax credit on all types of income, reducing the effective income tax rate to 3%. Now, GBL companies are subject to local taxes at a rate of 15%.

However, an 80% Partial Exemption Regime on certain income streams will still be available – as long as the above-mentioned substance requirements are met.

Income streams available for an 80% partial exemption (3% effective tax rate) include foreign dividends (subject to such an amount not being treated as an allowable deduction in source country), interest income and income derived by companies engaged in ship and aircraft leasing.

To qualify for a Global Business License, a company must meet at least one of the following criteria:

• the corporation has or shall have office premises in Mauritius; or
• the corporation employs or shall employ on a full-time basis at the administrative/technical level, at least one person who shall be resident in Mauritius; or
• the corporation's constitution contains a clause whereby all disputes arising out of the constitution shall be resolved by way of arbitration in Mauritius;
• the corporation holds or is expected to hold within the next 12 months, assets (excluding cash held in a bank account or shares/interests in another corporation holding a Global Business License) which are worth at least USD 100,000 in Mauritius;
• the corporation's shares are listed on a securities exchange licensed by the Commission; or
• it has or is expected to have a yearly expenditure in Mauritius which can be reasonably expected from any similar corporation which is controlled and managed from Mauritius.

In Mauritius, companies may be structured as protected cell companies.

Protected cellular companies are entities made up of a core and several ring-fenced protected cells, creating separate portfolios of assets and liabilities which are statutorily segregated.

Although the cells of a protected cell company do not have a separate legal personality, assets and liabilities of each cell must be kept separated and separately identifiable from the assets and liabilities of the protected cell company (core) and of each of the others cell.

Cellular companies have both core capital and cellular capital, which is the capital invested in individual cells.

Creditors of a cell are unable to seek recourse from the assets of any of other cells or of the core. This corporate vehicle provides protection contagion to fund promoters as an umbrella unit trust.

In addition, this corporate structure provides several cost savings such as avoiding to setting up new entities, lower costs on corporate governance, company administration and compliance.

All in all, GBL companies are commonly-used vehicles for investment, investment holding, and fund management purposes. They benefit from an advantageous tax regime with an effective tax rate that may be as little as 3%, access to a broad list of tax treaties and no withholding taxes on dividends and royalties, as well as an exemption on capital gains and tax credits on dividends received.