Top Ten reasons for using Mauritius
1. Geographical location and time zone – Mauritius is an island nation in the Indian Ocean about 2,000kms off the southeast coast of the African continent. The time zone (GMT+4) enables trading and business to be conducted with Africa, Europe, Asia and the US on the same business day.
2. Political stability – Mauritius is a democracy with a government elected every five years. According to the 2019 Democracy Index compiled by The Economist Intelligence Unit, which measures the state of democracy in 167 countries, Mauritius ranks 18th worldwide and is the only African country with ‘full democracy’.
3. Legal system – Mauritius has a fully functioning and effective legal system that derives from both French civil law and English common law. Unlike other countries that have become republics, Mauritius has retained the right of appeal to the Judicial Committee of the UK Privy Council, which remains the highest appellate court of the country. This guarantees an appeal process that is independent of any political or other form of bias.
4. Regulatory framework – Mauritius has a full, robust and compliant regulatory system. The Financial Services Commission (FSC) is the integrated regulator for the non-bank financial services sector and global business. Mauritius adheres to all international initiatives in respect of anti-money laundering, transparency and exchange of information. In 2017, it was one of only three jurisdictions worldwide to be top-rated by the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes.
5. Arbitration Centre – The MCCI Permanent Court of Arbitration (MARC) was set up in 1996 as an initiative of the Mauritius Chamber of Commerce & Industry (MCCI) to provide the business community with quick, efficient, flexible and confidential means of resolving disputes, through mediation or arbitration, as alternatives to litigation before state courts. It has pioneered institutional commercial arbitration in Mauritius and across the Indian Ocean region. It also initiated the ratification by the Mauritian parliament of the Convention of New York on the Recognition and Enforcement of Foreign Arbitral Awards Act 2004, the most important multilateral treaty on international arbitration.
6. Double tax agreements (DTAs) – Mauritius has been dubbed the ‘Gateway to Africa’ due to an extensive network of DTAs that enable it to act as a staging post for investment into Africa. It currently has 46 tax treaties in force, with a further seven treaties await ratification, five awaiting signature and 21 under negotiation. As Mauritius does not levy capital gains tax, there is an obvious advantage to companies from incorporating in Mauritius and being able to benefit from this network.
7. Products available – Mauritius offers three basic company types that offer investors large amounts of flexibility in structuring their businesses. The Global Business Corporation (GBC) and the Authorised Company (AC) are both licensed and regulated in Mauritius and are designed to perform offshore business. A GBC is a resident corporation able to benefit under the tax treaty network, while an AC is deemed to be ‘non-resident for tax purpose and is not therefore subject to income tax in Mauritius. A Domestic Company is the best way to conduct business with Mauritian residents and is the preferred route to investing in Mauritius but it can also be used for various other purposes.
A GBC is capable of being structured as a Protective Cell Company (PCC), which is a very useful structure for holding multiple investments in different projects. A GBC can also obtain additional licences that permit it to perform regulated activities, such as investment dealing, insurance brokering, pension scheme management, fund management and many others.
Mauritian law further allows for the creation and Trusts and Foundations, while any of the three company types outlined above can be set up as hybrid.
8. Highly competitive tax environment – Mauritius operates a ‘low tax’ rather than a ‘no tax’ regime. The maximum corporate tax rate is 15% but certain income streams, notably dividend and interest, are subject to an 80% partial exemption in respect of GBC and domestic companies, which gives an effective tax rate of no greater than 3% on those streams. Income derived from exports is taxed at 3% without the requirement of landing goods in Mauritius. ACs are not subject to any tax in Mauritius. Additionally, the Mauritian government has recently created a number of tax holidays of between five and eight years in duration to companies engaging in certain activities, notably Global Treasury, Headquarters Administration and Development of Intellectual Property.
Mauritius imposes no withholding tax on dividends, interest and royalties, no capital gains tax, free repatriation of profits, no estate duty, inheritance tax or gift tax. T
9. Pool of qualified professionals – Mauritius has a ready supply of skilled, educated and, in many cases, bi-lingual staff and has attracted many financial institutions and professional service providers to service the international finance centre. As a result it has a strong cohort of lawyers, accountants and other professionals whose services can typically be obtained at lower cost than in many equivalent jurisdictions.
10. Banking – The Mauritian banking sector currently supports 20 banks – of which five are local, nine are foreign-owned subsidiaries, four are branches of foreign banks and one is a joint venture, while one is licensed as a private bank – and is characterised by the wide range of services provided. So investors into Mauritius can almost always find a bank that will suit their needs. Besides traditional banking facilities, specialised services include fund administration, custodial services, trusteeship, structured lending, structured trade finance, international portfolio management, investment banking, private client activities, treasury and specialised finance. The international banks offer a wide range of global banking and financial services to corporate, institutional and private clients. Some of the biggest and most reputable international banks are present in Mauritius and actively carry out international cross border activities. Mauritius permits bank accounts to be kept in all major currencies and does not have any exchange control regulations.