Company formation:
Mauritius

The Republic of Mauritius is renowned for its stable economy, robust infrastructure, and investor-friendly policies. Strategically situated, it serves as a bridge between Africa and Asia, drawing entrepreneurs from across the globe. Its favorable tax system and diverse, multilingual workforce have earned it a reputation as a go-to destination for international business ventures and offshore activities.

Why opening a company in Mauritius?

Mauritius offers a conducive business environment with its straightforward regulatory system and a range of fiscal incentives. The local government actively encourages foreign investments, making it a prime choice for entrepreneurs looking for tax optimization and a strategic geographical location. The fiscal benefits are particularly appealing to service-oriented businesses and those looking to establish holding companies.

Advantages

Incorporating a company in Mauritius offers a myriad of benefits. Mauritius is known for its robust and business-friendly infrastructure, favorable taxation system, and a government that actively supports foreign investment. This has made it a preferred location for many international businesses. Not only does Mauritius offer a sound business environment, but its strategic location serves as a bridge to both Asian and African markets. Let’s dive into some of the key advantages of setting up a company in this island nation:

Disadvantages

While Mauritius offers numerous benefits for businesses, there are also challenges to consider when incorporating a company there. It’s crucial to weigh these challenges against the advantages to make an informed decision. Here are some of the potential downsides of setting up a business in Mauritius:

Most popular sectors to set up a company in Mauritius

The financial sector, tourism, real estate, and agri-business are some of the most popular sectors in Mauritius. The island’s reputation as a financial hub, combined with its scenic beauty, makes both financial services and tourism lucrative sectors. Real estate, especially luxury properties, has seen a surge due to foreign investment. Additionally, Mauritius has a rich tradition of sugarcane farming, making agri-business a viable sector.

Fiscal system in Mauritius

Mauritius boasts a transparent and efficient fiscal system, characterized by moderate tax rates, no capital gains tax, and absence of withholding taxes on dividends, interest, and royalties. The network of Double Taxation Agreements (DTAs) further enhances its appeal as a business destination.

Taxes

The tax system in Mauritius is straightforward and business-friendly. Companies, both local and global business entities, are taxed at a flat rate of 15%. However, through the application of tax credits, the effective rate can be reduced, sometimes even to zero. Income derived outside Mauritius can be exempted from taxation, making Mauritius a favorable location for holding companies. There’s no capital gains tax, no inheritance tax, and no stamp duty on share transfers. Furthermore, dividends, interest, and royalties are not subject to withholding tax.

VAT in Mauritius

The standard Value Added Tax (VAT) rate in Mauritius is 15%. It’s levied on goods and services at every stage of the production and distribution process. However, some goods and services are zero-rated or exempted, providing relief to businesses and consumers.

CFC Rules

Mauritius did not have specific Controlled Foreign Company (CFC) rules.

Requirement

Local director

A company in Mauritius is not necessarily required to appoint a director who is a resident or citizen of Mauritius. However, for certain tax benefits, a resident director might be necessary.

Local secretary

There’s no strict requirement for companies in Mauritius to appoint a secretary who is a resident or citizen.

Annual return

Companies in Mauritius must file an annual return, detailing their financial performance and other pertinent details, to ensure compliance with local regulations.

Audited accounts

Larger companies, especially those dealing with foreign clients and investments, need to have their accounts audited. This ensures transparency and adherence to international financial standards.

Company types in Mauritius

Domestic Company (DC)

The incorporation and operation of a Domestic Company (DC) in Mauritius is largely governed by the Companies Act of 2001. Unlike the other classifications of companies available in this jurisdiction, DCs generally cater to the local market, providing goods and services primarily within the country. Although there are no restrictions on foreign ownership of a DC, it is fundamentally Mauritian in its scope of operations.

While there is no stipulated minimum share capital for establishing a DC, the financial practice within the company should abide by the prudential norms stipulated by the Financial Services Commission. Furthermore, taxation plays a pivotal role in the financial management of a DC. Subject to a corporate tax rate of 15%, these entities also gain access to the benefits accorded through the network of Double Taxation Avoidance Agreements (DTAAs) that Mauritius has with numerous countries. It enables both local and foreign investors to optimize their tax efficiency whilst ensuring compliance with local and international taxation laws.

Global Business Company (GBC)

Global Business Company (GBC) category underpins Mauritius as a recognized jurisdiction for global business endeavors. GBCs, while incorporated in Mauritius, typically conduct their business activities primarily outside of the national borders. A notable feature of GBCs is their wide utilization by international investors to optimize global tax efficiency by leveraging the extensive treaty network that Mauritius has established with several countries.

The GBC framework is formulated to be robust yet flexible, to cater to the varied requirements of international businesses and investors. With a modest prerequisite of a minimum share capital of USD 1, it allows entities of various financial scales to establish their operations under this structure. It is pivotal to note that while GBCs are subject to a standard corporate tax rate of 15%, they are potentially eligible for foreign tax credits, which can notably alleviate the effective tax rate.

Global Business Company 2 (GBC 2)

The Global Business Company 2 (GBC 2) is a type of entity which, for a period, was a preferred vehicle for international business and investment due to its tax-neutral status in Mauritius. Historically, GBC 2 entities were instrumental for entrepreneurs and entities looking to facilitate international trade, hold global assets, and manage wealth in a tax-efficient manner without being subjected to the local corporate tax regime.

It is vital to acknowledge that as of 1 January 2019, the GBC 2 classification was abolished following amendments to the Financial Services Act and the Income Tax Act in alignment with the OECD’s Base Erosion and Profit Shifting (BEPS) guidelines and EU tax principles. Existing GBC 2 companies were grandfathered until 30 June 2021, after which they were either dissolved or transitioned into a different company classification.

Authorised Company (AC)

In the financially bustling environment of Mauritius, the Authorised Company (AC) has come to establish itself as a popular model among foreign investors and businesses. With no minimum share capital requirement and tax exemption benefits, it provides a welcoming environment for a wide array of global ventures.

The Authorised Company is largely designed to cater to businesses that have the bulk of their dealings and management outside of Mauritius, thereby facilitating international business and trade. This corporate structure offers a robust and reliable framework for investors looking for a simplified setup with minimal statutory obligations. The legislative schema surrounding Authorised Companies is particularly navigated toward reducing bureaucratic impedance and enabling smoother operational pathways for businesses.

The AC, which is commonly indicated by appending “AS” to the company name, delineates a structure that isn’t subject to the same rigid or strenuous regulatory compliance often encountered in other jurisdictions. It becomes particularly attractive for companies that aim to manage costs effectively whilst harnessing the benefits of an international business presence. In light of the aforementioned aspects, businesses under the Authorised Company model in Mauritius have consistently demonstrated a strong propensity for global outreach and international trade and commerce engagements.

Limited Liability Company (LLC)

The Limited Liability Company (LLC), notably marked with “LLC” post the entity’s name, stands out as a distinct incorporation type in Mauritius, known for striking a balance between flexibility and legal protection. With a minimum share capital requirement of just one Mauritian Rupee, it makes a lucid entry point for both nascent enterprises and stable entities looking to diversify their operations.

One of the most significant attributes of an LLC is the legal protection it offers to its members. The financial liability of the shareholders is constrained to their investment in the company, safeguarding personal assets from the company’s financial obligations. Such a structure proves beneficial in mitigating financial risks involved, thereby providing a secure platform especially conducive for small to medium-sized enterprises (SMEs).

The tax bracket for LLCs in Mauritius is pegged at 15%, a competitive rate in comparison to global standards. This tax structure seeks to establish a just equilibrium, ensuring that companies contribute to the nation’s economy while not being overburdened financially. The LLC in Mauritius, therefore, epitomizes a business-friendly atmosphere, conjoining ease of management and financial prudence with a secure and sturdy legal structure, thus making it an appealing option for a myriad of businesses and investors, both local and international alike.

Limited Partnership (LP)

The Limited Partnership (LP) in Mauritius provides a remarkable platform for investors and businesses, bridging the traditional advantages of limited liability and the flexibility inherent in partnerships. Notoriously regarded as a fusion of characteristics present in corporations and partnerships, LPs have steadily become a staple in the investment sector, notably in the realm of private equity.

In a Mauritius LP, partners can be segregated into two primary categories: general and limited partners. General partners customarily bear unlimited liability and are often engrossed in the management of the partnership. Contrariwise, limited partners usually have their liability restricted to their investment and customarily abstain from engaging in management activities, offering a safeguard against potential business liabilities.

Taxation in Mauritius provides a nuanced approach where the fiscal burden is, to an extent, shaped by the specific arrangements and operations of the entity. Thus, comprehensive and meticulous planning is requisite to navigate through the taxation landscape, ensuring adherence to all pertinent regulations and optimal utilization of available concessions and treaties.

Limited Liability Partnership (LLP)

It is notable that there appears to be a typographical error in the provided constants, as both types of companies are denoted as “LLP”. Presuming that the second type intended was the Limited Liability Partnership (LLP), our exposition pivots toward this entity type. The LLP in Mauritius blends the structural flexibility of a partnership with the liability shield generally attributed to corporations, engendering a hybrid entity adept at catering to numerous business models and industries.

Similar to the LP, an LLP allows partners to reap the benefits of limited liability while enabling the employment of strategic management and operational practices commonly found in partnerships. However, LLPs introduce a distinct edge, namely, all partners bask in the benefit of limited liability, whilst maintaining the capability to involve themselves in the management of the business, absent the risk of negating their protected liability status.

The tax framework in Mauritius presents an opportunity for businesses to judiciously leverage various aspects to their advantage, providing they are in strict compliance with local and international tax laws and guidelines. The country’s reputation as a stable, regulated, and transparent jurisdiction further enhances its appeal, offering a conducive and robust environment for businesses to thrive amidst the dynamically evolving global financial landscape.

Protected Cell Company (PCC)

The Protected Cell Company (PCC) has, over the past decade, burgeoned as a remarkable and innovative structure within Mauritius’s financial landscape. This corporate structure, especially lauded within the insurance and collective investment scheme sectors, features a unique architecture which segregates and protects the assets and liabilities of different cells within the same company.

The core principle emanating from the PCC framework is the legal segregation of assets and liabilities between different cells, while still operating under a singular corporate entity. That is to say, the debts of one cell would not impact the assets of another, providing an isolated financial ecosystem which safeguards investments and mitigates risks.

This nuanced structure not only facilitates risk management and aids in asset protection but also serves as a multifaceted platform, endorsing a spectrum of investment activities and financial services. Consequently, investors and entities can meticulously structure their investments and manage risks within a singular yet compartmentalized corporate entity.

Variable Capital Company (VCC)

Embarking on a journey through the Variable Capital Company (VCC) regulatory framework unfolds a tapestry of flexibility and potent financial management capabilities, particularly esteemed within the sphere of fund management in Mauritius. The VCC is a corporate structure that is tailored to accommodate the specific needs and dynamics of investment funds, providing them with an agile and fluid mechanism to manage their capital.

The cornerstone of the VCC lies in its ability to vary its share capital with ease, aligning seamlessly with the intrinsic ebb and flow of fund management operations. Investors can redeem and issue shares at their net asset value, without the arduous necessity of adhering to a fixed capital constraint, thus ensuring an agile and responsive capital management framework that coherently resonates with the fluctuating market dynamics and investment strategies.

Moreover, the VCC structure enables funds to establish multiple sub-funds under a singular corporate umbrella, each operating independently and insulated from the fiscal vicissitudes of its counterparts. This allows for a diversified investment approach under a unified governance structure, optimizing operational efficiency and ensuring robust regulatory compliance across a myriad of investment ventures.

Private Trust Company (PTC)

The inception of a Private Trust Company (PTC) in Mauritius serves as an adept mechanism to manage and dictate the affairs of a specific trust or a cohort of trusts, essentially instituted for the affluent families or conglomerates. Within the Mauritian legal framework, the PTC operates under the aegis of the Financial Services Commission and it’s not proffered to the general public.

This financial architecture has surged in popularity owing to its flexibility and the capacity to cater to the distinct, often sophisticated, needs of high-net-worth individuals and families. Notably, a PTC is particularly useful when it comes to ensuring privacy, bespoke financial structuring, and facilitating an enhanced degree of control over the management and disposition of trust assets.

Whilst enhancing the exercise of control, the PTC framework simultaneously protects assets, effectively plans for succession, and robustly addresses a plethora of estate management conundrums, thereby intertwining financial efficacy with strategic familial or corporate planning.

Mauritius Foundation

The Mauritius Foundation, as a concept, infuses the Mauritian legal landscape with a vehicle that’s tantamount to a hybrid, amalgamating the characteristics intrinsic to both trusts and companies. Consequently, it has emerged as an entity that affords donors a consummate level of control over their assets, whilst simultaneously establishing a legal separation between the personal assets of the founder and the assets settled in the foundation.

Prevailing under the Foundations Act of 2012, the Mauritius Foundation enables asset management, succession planning, and wealth protection with an additional layer of legal and fiscal benefits. It functions as an independent entity, possessing its own legal personality and, therefore, has the capacity to hold assets, sue, and be sued in its own name.

A myriad of factors, including but not limited to, its ability to delineate the roles of beneficiaries and council members distinctly, its inherent confidentiality provisions, and its aptitude to endure perpetually, coalesce to render the Mauritius Foundation an astute choice for those who seek to amalgamate control, protection, and future planning in a solitary financial vehicle.

Sole Proprietorship

The allure of establishing a Sole Proprietorship in Mauritius primarily stems from its simplicity and minimal regulatory impositions. As a business structure, it is wholly owned by a single individual, offering ease of setup but coming with the pivotal point of unlimited liability. This implies that the personal assets of the proprietor may be used to mitigate business debts and liabilities, intertwining personal and business financial realms.

Financial accessibility is a significant attraction for adopting this model. There is no mandatory stipulation for a minimum share capital, making it financially accessible and thereby an appealing choice for small entrepreneurs, freelancers, and artisans. The simplicity extends to taxation as well, with a flat 15% income tax rate applied and profits being directly attributed to the proprietor’s personal income.

However, while the simplicity in formation and taxation provides an accessible pathway into business, the unlimited liability aspect necessitates cautious financial planning and risk assessment from the entrepreneur. Balancing the tangible benefits with the inherent financial risks, proprietors must strategically navigate through the entrepreneurial landscape, perhaps considering safeguards such as insurance and an emergency financial buffer.

Common questions