Mauritius Companies and Mauritius Trusts

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General Introductory and Offshore Tax Information

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

Mauritius Offshore Business Entities :

  • Mauritius Category 1 Global Business License Company
  • Mauritius Category 2 Global Business License Company
  • Mauritius Limited Life Company (LLC)
  • Mauritius Société — Partnership
  • Mauritius Société — Limited Partnership
  • Mauritius Offshore Trusts
  • Mauritius Offshore Insurance
  • Mauritius Sole Proprietorship
  • Mauritius Protected Cell Company

Mauritius Category 1 Global Business License Company (GBL 1)

Main Features:

  • Law — Companies Act 2001 and the Financial Services Act 2007
  • Specially legislated for conducting business internationally
  • Mauritius GBL1 are tax resident; i.e., subject to Mauritius tax
  • A GBL1 is not allowed to carry out business with local residents or in Mauritian Rupees unless allowed to do so by the Mauritius Financial Services Commission (FSC); only allowed limited business
  • A GBL1 can also benefit from double tax treaties if it has established its ‘place of management and control’ within Mauritius and pays local taxes, performs its financial transactions through bank accounts held in Mauritius and keeps general meetings in Mauritius
  • Minimum of one director who is resident in Mauritius
  • Must have at least two directors based in Mauritius if tax resident
  • Not permitted to have corporate directors
  • Corporate shareholders are permitted
  • Mauritius GBL1 are not allowed to issue bearer shares
  • No minimum capitalization requirement
  • Beneficial ownership and shareholding of Mauritius GBL1 may include both Mauritian residents and foreign nationals
  • Must file audited financial statement with the Financial Services Commission
  • GBL1s must be administered by a management company; but unable to own shares in a Management Company
  • License applications are processed only through a management company
  • Mauritius GBL1 are able to own shares in another GBL1; and in a GBL2 if there are no shareholders or beneficial owners are local residents of Mauritius
  • Able to own real property in Mauritius if approved by the relevant authority
  • Able to hold security, debentures or shares only if listed on the Stock Exchange; but not if held in any Mauritius company formed under the Companies Act 2001
  • Any domestic Mauritius bank account owned must be used primarily for ordinary day to day transactions
  • Mauritian GBL1 are restricted to conducting a specified list of activities; to include, aircraft leasing and financing; licensing and franchising, pension funds, trading, employment services, insurance, logistics and or marketing, shipping, ship management, financial services, asset management, ICT services, fund management, consultancy services

Mauritius Category 2 Global Business License Company (GBL 2)

Main Features

  • Category 1 Global Business Licenses are issued to private companies that have been constituted under the Companies Act 2001
  • The Companies Act 2001 and the Financial Services Act 2007 govern GBL2 companies
  • Corporations with category 2 global licenses must conduct their business transactions outside Mauritius and with non-residents
  • Mauritius GBL2 must transact only in foreign currencies and therefore unable to own a domestic Mauritius bank account
  • A minimum of one director is required
  • Directors may be natural or juridical persons; corporate directors not permitted
  • The terms, conditions and benefits of Mauritius DTA’s are not applicable to the GBL2
  • Beneficial ownership and shareholding cannot include Mauritian residents
  • No minimum capitalization requirement
  • Mauritius GBL2 are not allowed to issue bearer shares
  • Unable to hold securities, debentures or shares only listed on the Stock Exchange; may only hold such interest in a Mauritius company formed under the Companies Act 2001
  • Must have a registered agent; a Management Company can be used as registered agent
  • Unable to hold shares in a Management Company
  • Unable to own real property in Mauritius
  • Mauritian GBL2 companies are restricted to conducting a specified list of activities; to include: marketing, passive investment holding, non financial trading, logistics, non financial consultancy services, shipping, ship management

Mauritius Offshore Limited Life Company (LLC)

Main Features

  • LLCs in Mauritius were established by the Offshore Business Activities (Companies) Regulations 1995
  • Commonly used for investment and fund investment activities
  • GBC1 and GBC2 companies may be converted into or incorporated as limited life companies, or continued into Mauritius from a foreign jurisdiction as an LLC
  • Onshore companies may not acquire LLC status
  • Mauritius LLCs can be dissolved on the occurrence of a particular event
  • Structured like a partnership according to US tax law

Mauritius Société — Partnership (EN NOM COLLECTIF)

Main Features:

  • Law- Code de Commerce
  • Refers to Mauritius General Partnerships
  • Can acquire offshore status under the Code de Commerce Amendment Act 1985
  • The partner of a limited partnership may be a body corporate or physical persons
  • Each partner has unlimited partnerships in relation to the partnerships debts and obligations

Mauritius Société — Limited Partnership (EN COMMANDITE SIMPLE)

Main Features:

  • Limited Partnerships in Mauritius are provided for under the Code de Commerce
  • Refers to Mauritius limited partnerships
  • Can acquire offshore status under the Code de Commerce Amendment Act 1985
  • The partner of a limited partnership may be a body corporate or physical persons
  • Has one or more general partners whose liability is unlimited and one or more partners whose liabilities are limited to the capital contribution made to the partnership

Mauritius Offshore Trusts

Main Features Protective or spendthrift Trust:

  • Established according to the beneficiary’s wishes and interests regarding the trust’s termination, reduction or suspension of the beneficiary’s estate, or restriction on alienation of or dealing in that interest or part of it if the beneficiary becomes insolvent or his property is subject to seizure for the benefit of his creditors Purpose Trust
  • A trust may be created for a purpose, notwithstanding the absence of any beneficiary
  • A purpose trust established by a Mauritian resident is identified as a legal entity only if the appointment of the enforcer and his designated successor is approved by the Commission
  • The transfer or vesting on a non-charitable purpose trust of immovable property located in Mauritius is considered void and ineffective Charitable Trust
  • Are formed for charitable purposes such as poverty reduction, developing education and religion, and protecting the environment, freedom and human rights
  • The objectives of charitable trusts can be undertaken inside or outside Mauritius
  • Charitable trusts can be established as discretionary trusts
  • The following Trust Acts have been repealed: The Trusts Act 1989, The Offshore Trusts Act 1992 and The Trust Companies Act 1989

Mauritius Offshore Insurance

Main Features:

  • Law — Insurance Act 2005
  • Regulates Mauritius domestic and offshore insurance
  • Mauritius offshore insurance companies serve only foreign nationals and companies who do not reside in Mauritius
  • Mauritius insurance is grouped into long term insurance and general insurance business; reinsurance business is permitted
  • Insurers are only able to conduct one type of insurance business; however, if authorization is given to provide both types of insurance, both must be managed separately and as specified by the FSC
  • Long-term insurance includes pension business, life assurance, permanent health insurance
  • General insurance includes motor policy, guarantee, accident and health policy
  • All Mauritius insurers are required to maintain the margin of solvency stipulated by the authorities
  • Mauritius offshore insurance companies are tax exempt External Insurer
  • Companies or corporations offering long term or general insurance business as well as captive insurance business, but whose services are restricted only to policies which are non Mauritian as provided by the Act.

Mauritius Protected Cell Company

Main Features:

  • Governed Protected Cell Companies Act 1999
  • Is a single legal person
  • A cell created by a protected cell company does not make the cell an entity which is separate from the main company
  • Foreign companies may continue into Mauritius as protected cell companies
  • A company which has already been incorporated may allow for its conversion into a protected cell company
  • One or more cells can be formed by a PCC in order to segregate and protect its cellular assets
  • Every cell created by a PCC must have its own name
  • All companies formed under this Act must end their names with Protected Cell Company or PCC

Mauritius Sole Proprietorship

Main Features:

  • Sole proprietorships are provided for under the Code of Commerce
  • A sole trader with unlimited liability must register with the Registrar of Companies
  • If the business name is the same as that of the sole trader, he is not required to register with the Registrar of Companies
  • Sole proprietorships must file an annual return with the Commissioner of Income Tax
  • Not recommended for global business or use as offshore companies because of organizational structure; best used for domestic trade
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