Mauritius

Business Environment

Mauritius made a commitments to the OECD to eliminate harmful tax practices by the end of 2005. Under the Financial Services Development Act 2001 the Financial Services Commission took over the functions of the Stock Exchange Commission, the Controller of Insurance and the Mauritius Offshore Business Activities Authority. The Financial Services Commission is the regulator for all non-banking financial activities, including global business activities (formerly known as offshore activities), insurance business, the securities market. The Bank of Mauritius is the regulator of the banking sector.

Global business is defined under the Financial Services Development Act 2001 as activities carried on from within Mauritius with persons all of whom are resident outside Mauritius and which is conducted in foreign currency. The Act also defines global business as activities carried on by a private company incorporated or registered under the Companies Act 2001, which does not conduct business with persons resident in Mauritius nor conduct any dealings in Mauritius currency and which holds a category two global business licence.

The main corporate vehicles available to carry offshore activities from within Mauritius are: (1) category 1 global business licence; (2) protected cell company; (3) category 2 global business licence. Offshore activities can also be carried out through a trust structure or a société (partnership).

A category 1 global business licence (GBC 1) company is allowed to engage in various activities including those involving capital raising from the public. It is characterised by its provisions for investors' protection and is required to file annual audited financial statements with the Financial Services Commission. A GBC 1 may be set up by direct incorporation, or by registration of a branch of a foreign company, or by way of continuation where it is allowed by the law in the country of origin. A branch of foreign company may have access to Mauritius’ double tax treaties provided that local tax authorities are satisfied that effective control and management of the foreign company is in Mauritius. The GBC 1 structure allows a foreign company to register in Mauritius by way of continuation and gain tax relief for existing holdings in a country with which Mauritius has a double taxation treaty. A GBC 1 may be unlimited or limited by shares or by guarantee (for non-profit making businesses only). A GBC 1 may be registered as a limited life company. Offshore funds may be listed on the Stock Exchange of Mauritius.

A protected cell company (PCC) is a special purpose vehicle providing legal segregation of assets attributable to each cell of the company whether corporately or individually owned. A PCC may be directly incorporated or may be registered as a foreign company by way of continuation as a PCC as long as the incorporation and registration requirements prescribed in the Companies Act 2001 are satisfied. The incorporation procedure for a PCC is similar to that of a GBC 1. In the case of a continuation, additional requirements as laid down in section 5 of the PCC Act 1999 must be satisfied. Section 6 of the Act stipulates that the suffix 'PCC' must be added to the name of the company. The PCC Act also allows an existing company to convert into a PCC.

A category 2 global business licence (GBC 2) provides for greater confidentiality and is used for holding and managing private assets. A GBC 2 is not allowed to raise capital from the public. The GBC 2 is not resident for tax purposes and is barred from benefiting from double taxation relief under the Mauritius' tax treaties. The GBC 2 may either be limited by shares or by guarantee or limited by shares and guarantee or simply unlimited. An international company may also be registered as a limited life company.

Under the Trust Act 2001 a trust may be set up by residents and non-residents in Mauritius as charitable trusts, discretionary trusts, purpose trusts or trading trusts. Trusts are not required to disclose the name of the settlor or beneficiary. Mauritius' forced heirship rule does not apply to trusts set up by non-citizens. The Trust Act 2001 allows the enforceability of a foreign trust provided that it does not purport to do anything which is amounts to an offence under the law of Mauritius or is 'immoral or contrary to public policy'. A trust may carry on a 'qualified global business' after obtaining a category 1 global business licence. A trust may not apply for a category 2 global business licence.

The Code de Commerce Amendment Act 1985 allows for registration as a société en nom collectif (partnership) and société en commandite simple (limited partnerships). Both types of registration may be used for structuring investment as under the Financial Services Development Act 2001. A société may conduct any qualified global business activities after it has received a category 1 global business licence from the Financial Services Commission. However, a société does not qualify for a category 2 global business licence. The Finance Act 1996 allows sociétés to be covered by Mauritius' double taxation treaties.

The main vehicles used to carry out business, other than an approved offshore business, are the company or the société (partnership). Local companies and local branches of a foreign company are governed by the Companies Act 1984. Sociétés are governed by the Code de Commerce. Local companies are regulated by the Registrar of Companies. Both public and private companies should have a minimum of two shareholders. Private companies may not have more than 25 shareholders. A company must have a minimum paid up capital of Rs25,000.

There are four main vehicles available to carry out an approved offshore business from Mauritius: offshore companies, international companies, offshore trusts, and offshore sociétés. Offshore companies are governed by the Companies Act 1984, although the Mauritius Offshore Business Activities Act, 1992 overrides certain of its provisions in relation to offshore companies.

Offshore entities are regulated by the Mauritius Offshore Business Activities Authority (MOBAA). Offshore companies are required to disclose to the MOBAA their beneficial owners together with annual audited accounts. Under the Mauritius Offshore Business Activities Act, any information relating to an offshore company remains confidential unless disclosure is authorised by the courts on application by the Director of Public Prosecutions for the purposes of an enquiry or trial into the trafficking of narcotics, arms trafficking or money laundering. An offshore company must have a registered office in Mauritius at all times, and a secretary who is resident in Mauritius. A management company resident in Mauritius must also be appointed.

Within the category of offshore companies there are other specific vehicles that may be used: the protected cell company (PCC), the limited life company (LLC) and the offshore investment company (OIC). The PCC may be used only for the purposes of offshore insurance and offshore investment funds. Although the PCC is a single legal entity, it may comprise any number of cells. The assets and liabilities of each cell are segregated from the assets and liabilities of another cell. Creditors of a particular cell cannot claim against another cell.

LLCs have a fixed life, at the expiry of which, or the occurrence of a specified event the LLC dissolves. For the purposes of US tax laws, LLCs benefit from favorable tax treatment. An OIC invests shareholders funds mainly in securities with the objective of spreading risk and achieving capital growth. Under the Mauritius Offshore Business Activities (Companies) Regulations 1995, an OIC may redeem shares out of profits, gains or revenue (whether realized or unrealized), and out of the paid-up capital, the share premium account or any other reserves.

International companies are governed by the International Companies Act. An international company is not resident in Mauritius for tax purposes, and does not benefit from any of the double taxation agreements Mauritius has with other jurisdictions. There is no requirement to have a secretary in Mauritius. An international company must have a registered agent and a registered office (where all statutory books and records have to be kept) in Mauritius. While there is no requirement to register an offshore trust with MOBAA, failure to do so renders the trust unenforceable.

This is done by filing either a written or an oral declaration of trust. A one-off fee of US$250 is payable. The offshore trust is confidential. There is no requirement to disclose the either the settlor or the beneficiary. The Offshore Trusts Act provides for protective or discretionary trusts, charitable trusts, purpose trusts, commercial or trading trusts, and for foreign trusts. Mauritian law provides for a Société en Nom Collectif (partnership) or a Société en Commandité Simple (limited partnerships) to be registered for the purposes of offshore business activities. These vehicles are covered by the double taxation treaties Mauritius has with other jurisdictions.
For more information see PricewaterhouseCoopers (PDF): Doing Business in Mauritius. Financial Services Commission (PDF): Guide to Compliance (S023); Guide to Global Business.

Taxation

One of the major attractions of Mauritius as a base for inward investment in several countries, especially India, is its network of double taxation treaties.

Corporate income tax rates

Current normal rate: 35% (for assessment year ending 30 June 2001, thereafter 25%)
Tax incentive companies : 15%
Listed companies on the Stock Exchange (including a subsidiary of a listed company) : 25%
Offshore Companies: taxed as tax incentive companies (see below)
International Companies : Exempt

Offshore Trusts

Resident Offshore Trust (taxed on trust's net income) : 15%
Resident beneficiaries (taxed on distributions) : 15%
Non-resident offshore trust : Exempt
Non-resident beneficiaries : Exempt

Income Tax

Basic: 15% - 25%
Salaries of expatriate employees: 12.5%
Value Added Tax (basic rate): 10%

Notes

Offshore companies are included in the list of tax incentive companies.
Offshore companies registered before 1 July 1998 could either elect to be taxed at any rate between 0 to 35% or could irrevocably elect to be taxed at 15%. Companies registered on and after that date pay 15%, or until 30 June 2001 can elect to pay any rate between 15 to 35%.
Offshore companies are entitled to a credit for foreign tax on foreign source income. The foreign tax credit is equal to the higher of the actual foreign tax paid or the deemed foreign tax (at present 90% of the Mauritius Tax payable). The deemed foreign tax rate will reduce to 80% on 1st July 2003.
Associates of an offshore société are liable to income tax in respect of their share of income tax in that société at the rate of 15%. An offshore société may also elect to be taxed as a tax incentive company in which case it will qualify as a resident for the purposes of certain double taxation treaties.
An offshore trust is liable to tax as a tax incentive company on its chargeable income, and is entitled to foreign tax credit. The trustees of an offshore trust may make a declaration of non-residence, in which case the offshore trust will not be regarded as resident in Mauritius for tax purposes.
No capital gains tax is levied on gains arising on the sale of movable and immovable property (including shares) other than gains made on the parceling out of land for resale. Dividends are exempt from tax, and interests are taxed at the rate of 25% (subject to available exemptions).

Financial Services Commission
5th Floor, Block A,
Barkly Wharf,
Le Caudan Waterfront,
Old Pavillion Street,
Port Louis, Mauritius
Phone (230) 210 7000
Fax (230) 212 9459 / 211 3398
E-mail mobaa@intnet.mu
Internet: www.mobaa.net

Stock Exchange
The Stock Exchange of Mauritius (SEM) operates two markets: the official market, on which securities of listed companies are traded, and the over-the-counter (OTC) market. Currently, there are 41 companies listed on the official market representing a market capitalization of nearly US$1,314.45 million as at 31 March 2001. Foreign investors do not need approval to trade shares unless investment is for the purpose of legal or management control of a Mauritian company or for the holding of more than 15% in a sugar company. Revenues on the sale of shares can be freely repatriated and dividends and capital gains are tax-free for foreign investors. Internet site: (http://lynx.intnet.mu/sem/). Regulator: Stock Exchange Commission

Country Description
Republic of Mauritius. Capital: Port Louis. Dependencies: Rodrigues Island, the Agalega Islands and Cargados Carajos.

Population
1,210,500 (June 2002). Ethnic groups: Indo-Mauritians 68%, Creoles 27%, Sino-Mauritians 3%, Franco-Mauritians 2%.

Language
English (official) and French. Creole (common). Hindi, Urdu, Hakka and Bhojpuri languages are also spoken.

Currency
Mauritian rupee (Rs). US$1 = Rs27.4 (February 2003)

Legal system
A hybrid system based on both on the French Civil Code and English law. Mauritius has district courts, a bail and remand court, an intermediate court, an industrial court and a supreme court. The final court of appeal is the UK’s Privy Council. Mauritius has a written constitution.

Government
The head of state is the president. The prime minister is the head of government, and presides over the cabinet. The National Assembly, the country’s parliament, consists of 62 elected members plus up to eight members appointed by the election commission from the losing political parties to give representation to various ethnic minorities. Elections are held every five years.

President: Karl Auguste Offman
Prime minister (and minister of defence and home affairs, and external communications): Sir Aneerood Jugnauth

Cabinet
Deputy prime minister, finance: Paul Raymond Bérenger
Industry and international trade: Jaya Krishna Cuttaree
Agriculture, food technology and natural resources: Pravind Kumar Jugnauth
Social security, national solidarity, senior citizen welfare and institutional reform: Samioullah Lauthan
Local government and Rodrigues: Georges Pierre Lesjongard
Public utilities: Alan Ganoo
Tourism: Nandcoomar Bodha
Environment: Rajesh Anand Bhagwan
Public infrastructure, land transport and shipping: Anil Kumar Bachoo
Civil service affairs, administrative reforms: Ahmad Sulliman Jeewah
Labour and industrial relations: Showkutally Soodhun
Women's rights, child development and family welfare: Arianne Navarre-Marie
Foreign affairs, regional cooperation: Anil Kumarsingh Gayan
Education and scientific research: Louis Steven Obeegadoo
Health and quality of life: Ashock Kumar Jugnauth
Arts and culture: Motee Ramdass
Fisheries: Sylvio Louis Michel
Economic development, financial services and corporate affairs: Khushhal Chand Khushiram
Commerce and cooperatives: Premdut Koonjoo
Housing and lands: Mookhesswur Choonee
Information technology and telecommunications: Deelchand Jeeha
Attorney General, justice and human rights: Emmanuel Jean Leung Shing
Training, skills development and productivity: Sangeet Fowdar
Youth and sports: Ravi Raj Yerrigadoo

Elections
In elections held in September 2000, a coalition of the Mouvement Socialiste Mauricien (MSM) and Mouvement Militant Mauricien (MMM) received 51.7% of the vote and hold 54 seats in the National Assembly. The Parti Travailiste won 36.6% of the vote and holds six seats. The Organisation du Peuple Rodriguais, a regionalist party, holds two seats.

Political parties
Mouvement Socialiste Mauricien (leader Aneerood Jugnauth)
Mouvement Militant Mauricien (leader Paul Berenger)
Mauritius Labour Party (leader Navin Ramgoolam).
Organisation du Peuple Rodriguais (Rodrigues People's Organisation)

Economy (2002)
Mauritius is a diversified economy with growing industrial, financial, and tourist sectors. Sugarcane is grown on about 90% of the cultivated land area and accounts for 25% of export earnings. Mauritius has attracted about 9,000 offshore entities, many targeted at commerce in India and South Africa. Over all the services sector made up 71.1% of gross domestic product (GDP) in 2002, manufacturing 22.5% and agriculture 6.4%. The banking and financial institutions sub-sector made up 9.8% of GDP, while tourism contributed 6.2% of GDP. The export processing zone (EPZ), mainly textiles, made up 11.3% of GDP. An estimated 681,600 tourists visited Mauritius in 2002, an increase of 3.2% compared to 2001. Gross tourism receipts: Rs18,328 million (US$669 million), an increase of 0.9%.

Gross domestic product (2002)
Real growth rate 4% (revised forecast). GDP at market prices: Rs126,510 million (US$4,617 million). GNP at market prices: Rs143,090 million (US$5,222.3 million).

Exports and Imports (2002)
Exports of goods and services: Rs54,762 million. Imports of goods and services: Rs64,888 million.

Net international reserves (November 2002)
US$1,544.5 million or Rs42,319 million.

Annual Inflation rate (2002)
6.4%

Labour force (2002)
Total labour force: 541,100 (Mauritian and expatriate). Unemployment rate 9.8%. Foreigners make up 3% of those employed in Mauritius.

Government accounts (2001-2002 financial year)
The overall budget deficit for 2001-02 was Rs8,935 million, equivalent to 6.5% of GDP at market prices, compared to 6.7 per cent in the 2000-01 financial year. The total government debt was US$2,603 million (Rs75,815 million) at June 2002 or about 56% of GDP.

Government financial year
1 July – 30 June

Public holidays (2003)
1-2 January (New Year); 19 January (Thaipoosam Cavadee); 1 February (Abolition of Slavery and Chinese Spring Festival); 1 March (Maha Shivratree); 12 March (National Day); 2 April (Ougadi); 1 May (Labour Day); 1 September (Ganesh Chathurti); 25 October (Divali); 1 November (All Saints Day); 2 November (Anniversary of Indentured Labourers); 25 or 26 November (Eid-Ul-Fitr, depending on the visibility of the moon); 25 December (Christmas).

Time zone
GMT +4 hours. There is no summer time clock change.