Company registration in Mauritius

Mauritius is a small African country located on several islands, including the largest island of the same name, Mauritius, in the south-eastern Indian Ocean, about 900 kilometres from Madagascar. Mauritius is characterised by extraordinary political stability. During the years of independence there has never been a coup d’état in this country. Only the state system changed peacefully from a constitutional monarchy to a parliamentary republic.

Another characteristic feature of Mauritius is its economic prosperity based on three principles:

1. A sensible foreign policy. After independence, the islanders did not break off contacts with the former metropolis. Mauritius is a full member of the British Commonwealth of Nations. In addition to Great Britain, strong economic ties have been established with various countries — from India to France;

2. National economy with efficient market mechanisms. The free market, combined with the high labour capacity of the locals, has helped transform a once backward colony into a prosperous country with a high human development index. The islands have a vibrant agriculture, processing industry and banking sector;

3. Tourist Attractiveness. Tourists from Europe, the USA and South-East Asia appreciate Mauritius for its unique nature, picturesque beaches and comfortable resort infrastructure.

Western entrepreneurs often use Mauritius as a convenient springboard for establishing business ties with India and South Africa. A lenient tax regime and additional business incentives attract a large number of foreign entrepreneurs to this island jurisdiction every year. According to some reports, the number of registered companies of foreign origin in Mauritius reaches an impressive 15,000.

5 arguments in favour of opening a company in Mauritius

1. Economic and political stability

   As already emphasised, Mauritius is distinguished from other African jurisdictions by its extraordinary political stability. In this island state, a foreign businessman can invest in the development of his company and make long-term plans without any fear.

2. Tax benefits

   Mauritius has a relatively low corporate tax rate. The income of local corporations from operations such as exporting goods abroad is taxed at a favourable rate.

   Non-resident companies registered in the islands are exempt from paying corporation tax on profits earned abroad.

   The ways to optimise tax expenditure are not limited to zero and preferential rates. Mauritius has signed more than 40 bilateral double tax treaties with other jurisdictions.

3. Reliable trade relations with other states

   The Republic of Mauritius trades extensively with South Africa, India, China, France and the UK.

   Mauritius has a duty-free zone with more than 600 international companies registered. Settlements with foreign customers and suppliers are greatly facilitated by a well-developed banking sector and the absence of exchange controls.

4. High level of confidentiality

   Registration of an offshore company in Mauritius will allow the personal data of the founders and beneficiaries to be kept secret. And if the confidentiality provided by the state is not enough for a businessman, he can always use the services of nominee founders and directors.

5. Convenience of registering and doing business

   Since Mauritius is interested in the development of private business as a source of tax revenues to the budget, all processes related to the registration of new firms by foreigners and the organisation of their further work have been simplified as much as possible.

   To open a company in Mauritius, you will not need a lot of money to pay for the share capital, as its minimum amount is not regulated in any way and can be anything from 1 US dollar. Moreover, you can even register your company in the islands remotely, without leaving your home.

What type of company should I choose to register my business in Mauritius?

Both corporate structures and partnerships can be used to incorporate a business in Mauritius.

The three most common business structures are:

1. Domestic Company / DC — a local company that sells its goods and services exclusively on the domestic market;

2. Authorised Company — An authorised or authorised company operating only outside Mauritius;

3. Global Business Company / GBC is an international commercial company with the ability to trade both overseas and at the place of incorporation.

The listed business entities may operate as:

• Limited liability companies are commercial organisations in which, according to the articles of association, the liability of shareholders is limited to the value of the shares they hold.

  A distinction is made between private and public limited liability companies. Private companies can only issue registered shares, and new shareholders can only appear with the consent of the other founders. Such organisations cannot have more than 50 shareholders.

  Public companies must have 25 or more shareholders. Such entities are able to attract additional investment into their business because they can issue bearer shares and trade them on the financial market. Generally, public companies incorporated in Mauritius have a more complex management structure and higher cost of ownership;

• Companies with limited liability guarantee. Here the guarantee is a certain amount that the founders of the organisation undertake to pay to creditors in the event of its liquidation. There is a combined version of such an organisation — a company in which liability is limited to shares and a guarantee;

• A company with unlimited liability is an organisation in which the founders are fully and jointly liable for all debts and obligations arising from its activities;

• A Limited Life Company is a commercial organisation whose charter stipulates a term of existence not exceeding 50 years from the date of registration. In exceptional cases, with the authorisation of the regulatory authorities, a Limited Life Company may extend its term of existence up to 150 years;

• A company consisting of a single founder. In such a company, the sole founder is its sole director. However, the unique legal status does not exempt the entrepreneur from the obligation to hire a local corporate secretary within 6 months of incorporation;

• “Dormant” company. If a company has been inactive since its formation or has not operated since the end of its previous accounting period, it may, by special resolution passed at a shareholders’ meeting, declare itself a dormant company.

For offshore organisations in Mauritius whose business activities mainly take place abroad, an international company is more suitable. Let us take a closer look at the 2 most common types of such entities — the GBC1 and the authorised company.

Category 1 International Business Company / GBC1

The modern name for such business entities is a company with a Global Business Licence (First Category International Business Licence). Such firms are registered to conduct business in Mauritius and in other countries of the world at the same time. GBC1 pays taxes on all of its net profits, regardless of where the business was conducted.

Tax planning measures in an international commercial company category 1:

• Utilisation of the tax incentives granted by the Mauritius authorities. If a number of conditions are met, the relief will reduce the company’s income tax from the standard 15% to 3%;

• Reduction of tax payments on income earned abroad through international double taxation treaties. This option is available if Mauritius has such a treaty with the country where the international business company derived the income;

• Zero bets on capital gains when GBC1 sells its assets on one of the islands.

The state regulates the commercial activities of such companies by means of licences. Information on the beneficiaries of companies with Global Business Licence is publicly available.

Requirements of the authorities for the founders of an international commercial company of the first category:

• GBC1 must obtain a licence from the Financial Services Commission (FSC) before it can start operating. You need to submit a business plan for the future business and information about all of its beneficiaries to the Commission in order for the firm to be approved for a licence;

• Only 1 founder is required to open a GBC1. A company with a Global Business Licence can be established by a person or organisation from any country;

• In such a company, 2 directors must be appointed from amongst permanent residents or citizens of Mauritius;

• GBC1 also needs a local corporate secretary to operate successfully. Usually a specialised person or a law firm in Mauritius performs these functions;

• In order to register this type of company, it is necessary to rent an actual registered office in one of the islands – Mauritius or Rodrigues. Official notices and letters from government authorities are sent to the registered office address specified in the statutory documents. Usually the address of incorporation is provided by the law firm or management company that you have hired as your corporate secretary.

GBC1 is obliged to keep accounting records, undergo regular audits, organise a general meeting of the management and founders at least once a year, and submit financial and tax reports on time, regardless of where the company’s profits are generated.

Authorised or authorised company

Non-resident business structure, used by foreign entrepreneurs to register an offshore business in Mauritius. In an authorised company opened in the islands:

• Individuals and companies resident in other countries have a controlling interest and the right to distribute profits derived from the company’s activities;

• Commercial activities are only conducted abroad;

• The management of the organisation, that is, the making of decisions directly affecting the generation of profits, also takes place outside Mauritius.

All information about the directors and founders of an authorised company is private.

Tax planning measures in an Authorised Company registered in Mauritius:

• No corporation tax is payable on the income of an authorised company as it is wholly derived outside the country. However, this type of firm is not exempt from filing an annual tax return;

• As with other business entities in Mauritius, there are zero rates of dividend tax and capital gains tax for authorised companies.

Unfortunately, authorised companies cannot use Mauritius’ bilateral double taxation treaties with other countries to optimise their tax expenditure.

Requirements of the Mauritius authorities for authorised companies:

• An entrepreneur does not need to first obtain a licence from the FSC to register an authorised company in Mauritius;

• To start such a company, 1 founder and 1 director will be enough. This can be an individual or another company, including a tax resident of another state;

• An authorised company must have its own registration agent. The tax return and other official documents are filed through a reliable registered agent resident in Mauritius. His duties include correspondence between the company and the regulatory authorities, taking minutes of the meetings of the founders and directors, keeping resolutions and banking and corporate records;

• At the end of the accounting period, the authorised company submits a tax return and a financial statement to the supervisory authorities;

• Authorised companies are prohibited:

  • Manage investment funds;

  • Act as a trust;

  • To provide financial services, in particular to engage in banking or insurance activities;

  • Provide your registered office for the incorporation of other companies, act as corporate secretary and nominee director in another company.

Partnerships

In some cases, foreign entrepreneurs register partnerships in Mauritius with at least two founding partners.

The advantage of a partnership is the principle of pass-through taxation, where the profits earned by the company are distributed among the founders and only at the partner level are subject to income tax. The peculiarity of a partnership in Mauritius is that the memorandum of association must specify the duration of its existence, which by law cannot exceed 99 years.

Entrepreneurs can establish:

• A general partnership in which all members have full financial responsibility for the operation of their organisation;

• A limited liability partnership (LLP), which must have at least one general partner, a natural or legal person who participates in the management of the organisation and is liable for its debts with all its assets. An LLP registered in Mauritius also includes limited partners, founders whose liability is limited only to the value of the capital contribution or the financial commitment made at the incorporation of the company.

How do you register offshore companies in Mauritius?

If you have never set up a company abroad before, it is better to find a reliable and knowledgeable professional from the very beginning. With their support, you will be able to save yourself from typical beginner’s mistakes when you register a company in Mauritius.

As an example, let us consider the sequence of actions for registering GBC 1:

1. We first carry out a consultation to identify all the important circumstances and needs of our client. Then we sign a service agreement and choose the most suitable legal form for the future company in Mauritius;

2. Our experts will help you to choose an original name for the company and agree it with the regulatory authorities;

3. We will also handle the office search for a legal address;

4. Our specialists will then help you to draw up the documents required for company registration, including the Articles of Association and Memorandum of Association (Memorandum of Association). If the additional documentation is not in English, we will prepare and attach a certified translation. At this stage, the founders also need to select and approve 2 directors of the company;

5. As we are registering a company with the ability to operate in both domestic and foreign markets, we will require a Global Business Licence — a licence to conduct foreign economic activities. Before applying for a licence, our experts will prepare a competent business plan for your company, as well as collect and structure all the necessary information about the directors and beneficiaries of your company;

6. When all the documents are collected and the licence is obtained, our specialists pay the registration fee (this amount is included in the price of our services) and submit the application for company registration to the CBRD (Corporate and Business Registration Department) — a separate division of the Ministry of Finance. You do not need to go anywhere for this. We will complete the registration form for you and upload copies of the supporting documents in a special application that allows you to apply from anywhere in the world where you have an internet connection.

As all the previous steps have been completed correctly, it will take 1 working day to process your application. As soon as a favourable decision is made, you will be provided with an electronic certificate of company registration.

• You may need a current account at the bank where you are registered or an account with an electronic service for international payments. Signing a contract with a financial institution can be more complicated than registering an offshore firm. Therefore, those entrepreneurs who value their time seek help from the same professionals they have already worked with when starting a business in Mauritius.

How long does it take to open an offshore company in Mauritius?

In the GBC1 example considered, steps 1 to 6 of the process would take the foreign entrepreneur about 4 weeks.

It is easier to open an authorised company, as you do not need to obtain a licence from the FSC. The whole procedure, from the moment you first contact the specialists to the moment you receive your registration certificate, takes 2 weeks.

What are the costs involved in registering an offshore company in Mauritius?

The amount of the registration fee in this country, depending on the type of company, is 200-300 USD. We usually include this cost in the price of our services.

Of course, the costs of starting an offshore company are not limited to the registration fee alone. If you are incorporating an authorised offshore company, you will need a registered office in Mauritius. In the case of a GBC1 company, there will be the cost of obtaining a commercial licence (from $1,950), local directors’ salaries, corporate secretarial services and renting a registered office.

To find out exactly how much money you will need to register an offshore structure for your circumstances, book a consultation with a specialist from our company.

What taxes do companies registered in Mauritius pay?

Corporate tax

Mauritius resident companies pay corporation tax on all their profits wherever they are derived. Non-resident companies pay tax only on that part of their profits derived in the jurisdiction.

Corporate tax is charged on net profits at the standard rate of 15%. Profits of companies incorporated in Mauritius are subject to 3% corporate tax if they are derived from the export of goods abroad.

The government of this island nation provides entrepreneurs with an 80 per cent exemption from paying corporation tax on certain types of income, subject to a number of conditions.

To obtain a partial exemption from income tax, a company must fulfil 3 conditions:

1. The bulk of the firm’s profits must be derived in Mauritius;

2. In order to carry out these activities, the company must directly or indirectly employ qualified employees who are permanent residents or nationals of Mauritius;

3. In carrying out its business activities, an organisation should incur minimum costs that are proportionate to the scale of those activities.

If all 3 conditions have been met, a business organisation can claim an 80% exemption from corporation tax if the profit arises as a result:

• Receiving dividends from business abroad;

• Receiving interest (provided the company does not specialise in banking services);

• Leasing of ships and aircraft;

• The activities of a permanent establishment of a foreign company;

• The operation of collective investment funds, closed-end funds, management or administration of a collective investment fund;

• Working as a consultant, or working as an asset manager pre-approved by the FSC;

• Reinsurance services, or reinsurance brokerage services;

• Leasing or renting out international fibre optic capacity;

• Sales, financing, placement and management of assets such as aircraft and aircraft spare parts, as well as consultancy in the airline industry.

Corporate tax on banking income in Mauritius is calculated according to the following principle:

• 5 per cent on the first 1.5 billion Mauritian rupees (US$33 million) of revenue;

• 15% — on the portion of profit that exceeds the specified threshold.

Local tax legislation allows for zero tax payments on foreign income of offshore authorised companies. If a number of conditions are met, companies with a Global Business Licence have the opportunity to receive an 80% tax credit for corporate tax.

When the profits of a Mauritius resident or non-resident company were derived from the export of goods to other countries, a reduced corporate tax rate of 3 per cent applies.

Entrepreneurs in Mauritius do not pay capital gains tax if the assets of the company are not sold for commercial gain.

VAT

Mauritius has a 15% value added tax. A zero rate of this tax applies to certain goods and services in the islands.

The format of a short article does not allow us to tell you about the forms of fiscal payments and all the opportunities for tax optimisation in this country. You can get more detailed information by making an appointment for a consultation with our company’s specialists.

How to make the most of Mauritius for offshore business?

Imperial & Legal has a team of professionals whose vast experience allows us to successfully resolve any issues related to opening and running an offshore company in Mauritius. We will determine the appropriate legal form, optimise taxes and minimise registration costs. Our specialists practice an individual approach that takes into account all circumstances and personal wishes of the client.