New Global Business Licence (GBL)
In November 2016, Mauritius joined the BEPS Inclusive Framework, which commits signatories to implementing the minimum standards put forward by the OECD on harmful tax practices, tax treaty abuse, country-by-country reporting, and dispute resolution mechanisms.
In order to comply with this commitment, in August 2018 the Mauritian parliament approved the Finance (Miscellaneous Provisions) Bill, which provides for proposed changes to the tax regime for corporations with global business licences.
As of 1 January 2019, the 80% Deemed Foreign Tax Credit (DFTC) regime available to companies holding a Category 1 Global Business Licence will be abolished and the rate of tax for both domestic companies and GBCs will be harmonised at 15%.
A new licence, termed a Global Business Licence (GBL), will be mandatory if a foreign-controlled company wishes to conduct its business principally outside Mauritius or with such category of persons as may be specified by the FSC.
In place of the DFTC, a new Partial Exemption Regime will be introduced based on 80% of the relevant income and applicable to GBL and domestic companies. This will be effective from 1 January 2019 and will apply to:
Where a company has claimed the partial exemption, no credit for foreign taxes in the form of actual tax credit, underlying tax credit and tax sparing credit will be available. The definition of foreign-source income has been changed to “income which is not derived from Mauritius”.
A GBL holder will be required to carry out its income generating activities in or from Mauritius though the direct and indirect employment of suitably qualified persons and should incur a minimum level of expenditure in accordance with its level of activities.
It is also mandatory for the holder of a GBL to be managed and controlled from Mauritius and administered by a company, such as Sovereign, which holds a Management Company licence from the FSC.
Existing GBC1 companies, where licenses were issued on or before 16 October 2017, will be grandfathered until 30 June 2021. Licenses issued after 16 October 2017 will be grandfathered until 31 December 2018.
Also effective from 1 January 2019, the GBC2 category will be abolished. Existing GBC2 companies, where licences were issued on or before 16 October 2017, will be grandfathered until 30 June 2021. Licences issued after 16 October 2017 will be grandfathered until 31 December 2018. After 31 December 2018 or 30 June 2021 as applicable, GBC2 licences will lapse and companies will need to comply with the prescribed requirements of the GBL as issued by the FSC.