May 15, 2018

Mauritius - A jurisdiction of substance

With its strategic geographic location between Asia and Africa and its stable regulatory environment, Mauritius has strengthened its position as an investment gateway to Africa and other countries. The factors which have contributed to Mauritius as a preferred investment jurisdiction are:

  • Business-friendly environment with competitive tax regime
  • Stable economic, political and sound environment for more than 3 decades
  • Modern legislative and regulatory frameworks
  • No withholding tax on dividends and interests received from a Mauritian company
  • Fast expanding network of Double Taxation Avoidance Agreements (DTAAs) with 42 countries
  • A comprehensive network of Investment Promotion and Protection Agreements (IPPAs) for protection against expropriation and nationalisation
  • Availability of highly qualified and bilingual professionals
  • Presence of major international banks & international law firms with diversified set of offerings
  • White listed by the Organization for Economic Cooperation and Development (OECD)
  • FATCA compliant jurisdiction

The Financial Services Act (the “FSA”) which came into force in 2007 has been instrumental in the growth of Mauritius as an International Financial Centre (IFC) of substance

The FSA regulates the Global Business Sector and sets out the requirements for licensing, protection of consumers of financial services and the conduct of global business amongst others.

To further consolidate its position, the Financial Services Commission (FSC) of Mauritius has brought amendments to the Guide to Global Business in line with the government policy of enhancing the commercial substance requirements in Mauritius, especially for Category 1 Global Business Licence Company (GBC 1).

To determine whether a GBC 1 is managed and controlled from Mauritius, a GBC 1 will have to fulfill one of the following requirements in addition to satisfying existing substance requirements:

  • Office Premises - has office premises in Mauritius.
  • Full-time employee - employs at least one Mauritius resident at an administrative / technical level on a full-time basis.
  • Arbitration - the constitution of the company contains a clause whereby all disputes arising out of the constitution shall be resolved by way of arbitration in Mauritius.
  • Non-cash assets - holds assets within the next twelve (12) months (excluding cash held in bank accounts or shares/interests in another company holding GBL-1) which are worth at least USD 100,000 in Mauritius.
  • Listed shares - shares of the company are listed on a securities exchange licensed by the FSC
  • Annual expenditure - has a yearly expenditure in Mauritius which can be reasonably expected from any similar company which is controlled and managed from Mauritius.

Undoubtedly, the above amendments are aimed at enhancing the use of Mauritius GBC 1s in international tax planning.