A Foundation is an alternative vehicle available in Mauritius that fulfils similar functions to those of a trust but also has the administrative flexibility and advantages of a company. It is generally used for wealth management, succession planning, charitable activities or for commercial purposes alongside trusts, limited partnerships and corporate structures.
The advantage of both trusts and foundations is that they exist separately from the persons – settlor or founder – who have created them and are also separate from the persons who may have an entitlement to their assets – the beneficiaries. Both allow for the interests in the assets to be directed flexibly in respect of who may benefit and the circumstances and extent to which they may benefit.
Foundations in Mauritius are governed by the Foundations Act 2012. When a foundation is registered with the Registrar of Foundations in Mauritius and has obtained a certificate of registration, it enjoys a legal personality and can exercise all the functions of an incorporated body – it has the capacity to carry on or undertake any business or activity in or outside Mauritius, it can enter into any transaction and it can hold assets. It may also upon application to the FSC hold a Global Business Licence.
It is mandatory for Foundations to have a charter that is signed by all the founders. In addition, all foundations are required to have a secretary who may either be a Management Company or a person resident in Mauritius that is authorised by the FSC.
Foundations are particularly appealing to clients from civil law countries where the trust concept is not familiar or those who wish to use a legal entity for their activities while retaining the advantages and flexibility of a trust.
A Foundation is liable to income tax in Mauritius on its chargeable income at the rate of 15% but may be subject to an effective income tax rate of 3% whey they hold a Global Business Licence. Where a founder is non-resident in Mauritius and all the beneficiaries appointed under the terms of a charter or a will are, throughout an income year, non-resident in Mauritius, a Foundation will be exempt from income tax in respect of that year. A Foundation whose exclusive purposes or objects are of a charitable nature will also be exempt from tax in Mauritius.