Incorporating a domestic company in Mauritius

Domestic Companies in Mauritius

Mauritius boasts of a conducive environment for business facilitation, activities and investment with a comprehensive set of guiding legislations including the Business Facilitation (Miscellaneous Provisions) Act 2019, the Companies Act 2001, the Business Registration Act 2002 and the Financial Services Act 2007.

A Domestic Company is the best way to conduct business with Mauritian residents and is the preferred vehicle for investing in Mauritius. A company incorporated in Mauritius can be 100% foreign-owned and there is no minimum capital requirement.

Domestic Companies in Mauritius are governed by the Companies Act 2001 and are taxed locally, with a headline corporate income tax rate of 15%, though various exemptions and reductions may apply.

They are a distinct legal structure from both the Global Business Licence (GBL) company and the Authorised Company. A Domestic Company can conduct business both within and outside of Mauritius, and can benefit under Mauritius’s extensive network of double taxation treaties (DTAs).

Types of Domestic Company in Mauritius

The following types of company can be incorporated in Mauritius:

01

Company limited by shares – the liability of its shareholders is limited by its constitution to any amount unpaid on the shares respectively held by the shareholder

02

Company limited by guarantee – the liability of its members is limited by its constitution to such amount as the members may respectively undertake to contribute to the assets of the company in the event of it being wound up

03

Company limited by shares and guarantee (hybrid) – the liability of its members who are shareholders, is limited to the amount unpaid, if any, on the shares respectively held by them and who have given a guarantee, limited to the respective amount they have undertaken to contribute, from time to time, and in the event of it being wound up

04

Unlimited company – no limit placed on the liability of its shareholders

05

Foreign company – a body corporate that is incorporated outside Mauritius and that has a place of business or is carrying on business in Mauritius

06

Limited Life Company – the constitution limits the life or duration of the company to a period not exceeding 50 years from the date of its incorporation. This period may be extended to a maximum of 150 years.

Criteria for Mauritius Domestic Companies

Companies incorporated or registered under the Companies Act 2001 can be either private or public.

A Public Company can have more than 25 shareholders and may offer to sell its shares to the public. A Private Company cannot have more than 50 shareholders and must not make any offer to the public to subscribe for its shares or debentures.

A Private Company is termed as a small private company if its turnover in the last preceding accounting period is less than MUR50 million (c. USD1 million) or such other amount as may be prescribed. It cannot be a company holding a Global Business Licence.

All Domestic Companies are required to maintain a registered office in Mauritius and appoint a minimum of one resident director. The Companies Act 2001 also requires all companies other than small private companies to have a secretary and to be ordinarily resident in Mauritius.

All companies must maintain statutory books and accounting records that adequately show the transactions and financial position of the company. All companies, except for small private companies, must have their financial statements audited. These must then be filed with the Registrar.

All companies must also file an annual income tax return with the Mauritius Revenue Authority.

Tax regime for Mauritius Domestic Companies

Under domestic law, a company is resident in Mauritius for tax purposes if it is incorporated in Mauritius or centrally managed or controlled in Mauritius. A company not incorporated in Mauritius is resident in Mauritius only if it is centrally managed and controlled in Mauritius.

Under the Income Tax Act, Domestic Company in Mauritius is subject to income tax on its net worldwide income, currently at a flat rate of 15%. Companies engaged in the export of goods are liable to be taxed at the rate of 3% on the chargeable income attributable to exports based on a prescribed formula.

The export of goods includes international buying and selling of goods by an entity in its own name, where the shipment of such goods is made directly by the shipper, in the original exporting country, without the goods being physically landed in Mauritius.

Dividends paid by a Mauritius-resident company are exempt from income tax. Foreign source dividends are taxable but a foreign tax credit can be obtained for any foreign tax suffered. The foreign tax credit is limited to the amount of Mauritius tax on that income.

Partial Exemption regime

All resident domestic companies are eligible to the various tax reliefs that are available under any double tax treaties in place.

A company can avail itself of a partial exemption of 80% or 95% on certain type of income or business activities as follows:

Foreign dividend derived by a company.
Interest derived by a company other than bank, non-bank deposit taking institution, money changer, foreign exchange dealer, insurance company, leasing company, and company providing factoring, hire purchase facilities or credit sales facilities.
Interest derived by a person from money lent through a Peer-to-Peer Lending platform.
Profit attributable to Foreign permanent establishment.
Income, other than interest, derived by Collective Investment Scheme (CIS) or a Closed End Fund.
Income derived by CIS manager, CIS administrator, investment adviser, investment dealer or asset manager licensed by the Financial Services Commission (FSC).
Income derived by a company engaged in the leasing of ships,/aircrafts/ locomotives and trains, including rail leasing.
Reinsurance/reinsurance brokering activities.
Leasing and provision of international fibre capacity.
Sale, financing, arrangement, asset management of aircraft and its spare parts and aviation advisory services.
Income derived by a company holder of a Payment Intermediary Services (PIS) licence issued by the FSC.
Income derived by a company holding a Robotic and Artificial Intelligence Enabled Advisory Services licence issued by the FSC.

The partial exemption is available to subject to the company meeting the following economic substance conditions:

It must carry out its ‘core income generating activities’ in Mauritius.
It must employ directly or indirectly, an adequate number of suitably qualified persons to conduct its core income generating activities.
It must incur a minimum expenditure proportionate to its level of activities.

Additional taxes include:

Value Added Tax (VAT) – 15%, which is mandatory for companies with annual turnover above MUR3 million.
Corporate Social Responsibility (CSR) Contribution – 2% of chargeable income.
A Corporate Climate Responsibility (CCR) Levy – 2% is applicable on chargeable income for companies with a turnover exceeding MUR50 million.

Other forms of domestic business structure in Mauritius include:

Partnerships or Societés – ‘Societés’, commonly called Partnerships, are governed by the Code de Commerce (Amendment) Act 1985 and are an association of two or more partners (associés) formed for a specific purpose. The duration (durée) of a partnership is determined in the deed (status) but cannot exceed 99 years. The partners can renew, extend or dissolve the partnership at any time before the duration comes to an end or at the end of the duration.

Limited Partnerships (LPs) – A Limited Partnership is set up under the Limited Partnerships Act 2011. It can can elect to have legal personality and must have at least one general partner who is liable for all the debts and obligations of the partnership, and one limited partner who is liable only up to the maximum amount of its commitment.

Limited Liability Partnerships (LLPs) – A Limited Liability Partnership (LLP), introduced by the Limited Liability Partnerships Act 2016, is a type of partnership vehicle that combines features of both a company and a limited partnership.

Foundations – A Foundation is set up under the Foundation Act 2012 for any purpose specified in its charter, provided its objects are not contrary to the laws of Mauritius. Purposes can be charitable, non-charitable or both, and for the benefit of a person or a class of persons or to carry out a specified purpose, or both.