As early as 1998, Mauritius had begun to establish itself as an international business center. A series of tax avoidance treaties were signed (DTA’s) not only as Mauritius commitment to create a level playing field for stakeholders, but to offer as many possibilities and options.
Mauritius therefore offers different offshore business entities which facilitate global trade and investment in and from within Mauritius. In 1998, very decisive measures were implemented to reform the tax regime for offshore companies; one of which included 15% flat income and corporate tax rate which was applied across the board for all companies to which Category 1 Global Business Licenses were issued. Prior to this, Mauritius companies opted to be taxed between 0% and 35%.
Under this system, Mauritius license companies are given the opportunity to operate as either global/international business companies — that is, as Mauritius companies owned by local residents and or foreign nationals involved in external trade and commerce; or as offshore companies, which are Mauritius companies solely owned by foreign nationals and engaged only in offshore trade and business. These two possibilities are available through two licensing options, namely the Category 1 Global Business License, under which domestically based and or owned companies may engage in global trade, and the Category 2 Global Business License under which companies operate as traditional offshore companies.
Category 1 licensees differ mainly from Category 2 licensees in that they are tax resident, subject to a 15% tax rate, and so are subject to the special trading conditions agreed under DTA’s established by Mauritius with foreign countries, while Category 2 companies or licensees are not tax resident, subject to zero tax, and do not benefit from DTA’s. Also, Category 1 licenses are granted to both public and private Mauritius companies whereas Category 2 licenses are issued exclusively to private companies.
It must also be noted that the Category 1 license serves as an incentive to Mauritius companies given the fairly low 15% tax rate imposed and the various tax exemptions granted. To this end, Category 1 companies are exempt from paying charges, duties, levies and fees for any of the (qualified — explained below) activities that it carries on, approved transactions with local residents (corporations), transactions involving real estate in Mauritius and on encumbrances, pledges or charges which may have been created over debentures or shares that the company may have issued. Likewise, in addition to total tax exemption, Category 2 licensees are relieved from fees, charges, duties and levies on transactions and business activities, shares and securities and any property transferred or received. In both instances, however, these Mauritius international/offshore business entities are subject to registration, processing and annual fees which are payable to the Registrar of Companies and the Financial Services Commission as required.
Another type of Mauritius offshore business entity, the Société, has the structure of a Partnership. A Société may operate as a Mauritius offshore business entity if holding a Category 2 license. However, if resident in Mauritius and holds a Category 1 Global Business Licence, the Société is not subject to income tax but its members are liable to tax on income. As an alternative, the members of a Société may opt to be taxed as a natural person (individual) at a maximum rate of 15% or as a juridical person (corporate entity) at 15%.
Limited Life companies can operate as Mauritius offshore companies if income is earned strictly offshore. The LLC is tax efficient in that its tax regime is similar to that of a partnership, but its organizational and legal structure is different.
General fiscal incentives for Mauritius offshore business entities include no withholding tax on dividends and interest, no capital gains tax, zero estate duty and inheritance tax
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