Key considerations for expanding into Mauritius
2023-01-16
Mauritius is located in the South-West Indian Ocean, making it an attractive gateway between Africa and Asia. With a population of 1.3 million, Mauritius has an estimated GDP growth rate of 3.8%, boasting one of the fastest-growing economies in Africa, backed by social and political stability. Successive governments have continued to show a commitment to a market-driven economy and encourage foreign investments. It is ranked first on the Ibrahim Index of African Governance 2020 and 13th on the World Bank’s Ease of Doing Business 2020 ranking.
General Considerations for doing business in Mauritius
Mauritius Global Business Company (GBC)
The Mauritius Global Business Company is an entity type which generally exists for foreign-controlled entities who intend to set up operations in Mauritius. In 2016, Mauritius agreed to the global BEPS agreement which relates to tax evasion, regulation etc. This introduced an amendment to the Mauritian laws which provides that all non-resident-controlled entities in Mauritius will be required to obtain a Global Business License if they wish to conduct business operations in the country. The benefits of this company include expanding your consumer market and an abundance of employees.
- Minimum shareholders – 1
- Minimum capital USD 1
- Minimum 2 directors (Residing in Mauritius)
- Local corporate bank account
Mauritius Authorized Company
The Mauritius Authorised company is one whose operations and business control/management exist outside of the country. This entity is regarded as a non-resident for tax reasons. Authorised entities will not be allowed to operate in the banking sector, provide trusteeship services, manage Collective Investment Schemes or provide registered office facilities to corporations. They are allowed to operate in investment and property holdings, IT, international trade, marketing etc.
- Minimum shareholders – 1
- Minimum capital USD 1
- Minimum 1 director (Can be foreign national)
- Local corporate bank account
Mauritius Limited Liability Partnership
The limited liability partnership consists of characteristics of both corporations and partnerships. This entity type consists of 2 or more partners whose personal liability is limited only to the amount each individual partner invested into the entity. This means that if the business is unsuccessful, creditors may not be allowed to attach any personal assets which belong to the partners. Some advantages of establishing a limited liability partnership are that it allows for increased capital investment, and less risk as it is spread between partners, individual skills and expertise and it is a flexible business type.
The preferred partnership structure is usually the LLP since it bears the features of a partnership but also provides the comfort that the liabilities of the partners are limited to the extent of their contributions to the LLP. However, the choice between an LP and LLP will also hinge on the type of activities which it will be conducting.
- Minimum capital of USD 1 per partner
- Minimum two partners (both can be foreigners)
- It should have a resident manager
Mauritius Limited Liability Company
The LLC is a type of business entity that is similar to a partnership, however, its unique structure safeguards the owners from incurring any personal liability for the debts of the entity. LLCs do not pay direct tax on profits, instead, they pass profits to members who are subsequently taxed individually. There is a restriction that banks and insurance entities cannot be LLCs however any other individual/entity can. The regulation varies by State. Setting up an LLC will offer protection for owners from personal liability and it provides flexibility for investors. It is fairly easy to set up as well.
- Minimum shareholders – 1
- Minimum capital USD 1
- Minimum 1 director (Residing in Mauritius)
- Annual filing is mandatory
Trusts
A trust is an arrangement for holding and administering property, where the beneficial owner (known as the settlor) creates the trust and transfers property or legal rights to a trustee. In turn, the trustee has a fiduciary obligation to hold or deal with the property for or on behalf of the beneficiaries in accordance with the trust objectives (known as a beneficiaries trust) or for certain purposes (known as a purpose trust).
A trust can have up to four trustees, one of whom must be a qualified trustee (i.e. a management company or a person resident in Mauritius and authorised by the FSC to provide trusteeship services). The deed creating the trust must be in writing. A trust is liable to tax its chargeable income. Trusts are commonly used to preserve family assets and are substantially free from taxation.
Mauritius Tax Landscape
The Mauritius economy relies heavily on tourism, exports and financial services. In recent years the country has been on an uptrend, and it is classified as an Upper-Middle Income economy. The tax landscape has been drastically changed due to the pandemic and other social and political factors which have affected the economy. The government has introduced new tax measures such as laws and guidelines to combat these changes.
There have been various measures introduced due to the changes in the tax landscape. One of the most significant changes is the reforms in the global business sector. There is a new Global Business Licence (GBL) replacing the old licence from 2019 forwards, The tax exemption which entities received under the previous licence (GBC1) is abolished.
The country has also introduced a new regulation which entities can benefit from. Companies that operate in deep sea exploration and make use of deep ocean water for air conditioning services, and facilities will be tax-exempt for the next 8 years. There is also a reduced tax rate granted to entities that are exporting goods. This rate of 3% is applied to exported goods.
Corporate Tax
This refers to the additional taxes which businesses are required to pay based on their operations and certain government requirements. Companies are taxed based on their operations as well as any relevant tax laws. Some examples of corporate taxes which may apply to your business will include payroll taxes, stamp duty taxes, social security contributions (made by the employer), transfer tax, and digital services tax along with any other additional taxes which apply based on operations (e.g. environmental tax).
- The employer's contribution to the social security fund (CSG) will be determined by the employee's salary. The contribution tax rate ranges between 3%, 4.5%, 6%, and 9%. There are additional contributions consisting of 2.5% (National Solidarity Fund) and 2.5% (Human Resource Development Council Levy).
- The stamp duty amount ranges between MUR 25-1000 and is applied to every document which is registered/inscripted.
- There is an additional campement site tax imposed on owners of campement sites in specific zones (MUR 2-6 per square metre).
Customs and excise tax
This is a tax charged on any products and services which are imported and exported in Mauritius. There is a distinction between customs and excise duties. Excise duties refer to the tax which is imposed by the government on certain goods for their production licensing and sale. The excise duties apply to products which are locally manufactured whereas customs are charged on goods which are imported into the country. Customs and Excise duties are usually charged on luxury products, non-essential items (cosmetics or electrical equipment) as well as products which are consumed daily (alcohol, tobacco etc.)
- Excise duties are applied to spirits, vehicles, and petroleum products.
- Customs duties are applied to items imported into Mauritius. The rate applied is stipulated in the Customs Tariff Act.
Pay As You Earn
Pay As You Earn (PAYE) is a system whereby employers are required to withhold tax from the emoluments of employees chargeable to tax at the time the emoluments are received by or made available to the employees. To arrive at an employee’s chargeable income, an individual is entitled to deduct from his or her net income the appropriate Income Exemption Threshold based on the number of dependents of the employee, or other reliefs.
Exemptions and Reliefs
The following reliefs or exemptions may be claimed by an employee under the tax laws of Mauritius:
• exemption in respect of a dependent child pursuing an undergraduate course;
• deduction for household employees; • interest relief on a secured housing loan;
• relief for medical insurance premiums or contributions;
• solar energy investment allowance;
• rainwater harvesting investment allowance; and
• deduction for contribution to the COVID-19 Solidarity Fund.
Other information
There has also been a new law passed (BEPS agreement) by members of G7, G20 and OECD, which sees a new minimum tax rate of 15% for corporations conducting their business in specific countries. The agreement aims to firstly, tax foreign nationals who have highly profitable businesses subjected to pay tax in the country in which they have their operations (under Pillar one). Secondly, there is an introduction of a new standard corporate tax of 15% for bigger organizations and companies (annual revenue exceeds 750 billion euros) operating their business activities overseas (under Pillar two). The agreement is aimed at being introduced before 2023. The agreement is to stop tax avoidance.
Mauritius is presently a party to around 44 tax treaties, including with Botswana, Congo, France, Germany, Italy, Lesotho, Luxembourg, Madagascar, Mozambique, Namibia, Rwanda, South Africa, Swaziland, the United Kingdom, Zimbabwe and Uganda. In addition, a series of treaties are under negotiation.
Mauritius Legal Landscape
Mauritius has a ‘hybrid’ or ‘mixed’ legal system, inherited from its colonisation by the French and the British. The constitution of Mauritius is based on the Westminster model, while the substantive law (civil rights, property law, contract law) are French-derived and procedural laws are English based. Modern business laws such as company, insolvency and financial services law are modelled on the Anglo- Saxon jurisdictions.
The government has recently enacted several pieces of legislation that have widely affected the corporate and financial sectors. National Payment Systems (Authorisation and Licensing) Regulations 2021.
The Bank of Mauritius (BoM) has recently issued the National Payment Systems (Authorisation and Licensing) Regulations 2021 (Regulations), which were made operational as of 1 June 2021.
The Regulations were issued two years after the promulgation of the National Payment Systems Act 2018 (NPS Act) in January 2019.
The NPS Act sets the framework for the regulation, oversight and supervision of payment systems in Mauritius, and sparked the launching of the new National Payment System branded as MauCAS (Mauritius Central Automated Switch) by the BoM in August 2019. In a nutshell, the Regulations provide for the authorisation process of operators of payment systems, clearing systems or settlement systems, the licensing of payment service providers, the form and manner for applying for an authorisation or a licence, and the applicable fee for obtaining an authorisation or licence.
Immigration Paths in Mauritius
Non-Mauritian citizens can choose to work, invest, live or retire in Mauritius through the relevant permits, namely, Mauritius Business Visa, MAURITIUS WORK PERMIT (OCCUPATION PERMIT), the Permanent Residence Permit, the SELF-EMPLOYED MAURITIUS OCCUPATION PERMITand the Digital Nomad visa.
Additionally, non-citizens and ex-pats are allowed to acquire residential property in Mauritius under schemes approved and managed by the Economic Development Board such as the Integrated Resort Scheme (IRS), the Real Estate Scheme (RES), the Property Development Scheme (PDS), the Smart City Scheme and Ground +2 apartments.
Mauritius Business Visa
It doesn’t take too long to obtain a Mauritius business visa. The process is in place to enable a businessman to institute the company. Business visas are non-immigrant visas for persons who wish to enter Mauritius temporarily for business. Depending on the purpose of the visit, as well as the timeframe visitors are planning to stay, this visa may suit your needs. This visa is only applicable for 90 days per 180 days (short-term visa).
Permitted Activities
Various activities are permitted when granted a business visa. These include:
- Conferences
- Seminars
- Training courses or activities
- Meetings
Procedure
The application for the Mauritian business visa is as follows:
- You need to fill out the necessary application forms available online, and initiate a case with Centuro for assistance.
- The required documents must be completed and submitted to the relevant government authorities.
- An average of five working days is required for processing applications and for a visa to be issued, provided all relevant documents are submitted.
Timelines
A business visa will take roughly three to five working days for processing applications and for a visa to be issued, provided all relevant documents are submitted.
MAURITIUS WORK PERMIT (OCCUPATION PERMIT)
To be eligible for a work permit in Mauritius, the applicant should be between 20 and 60 years old. Exceptions to this requirement may be made for workers with specific expertise. Foreign nationals will need a Residence Permit as well as a Work Permit to be employed in Mauritius legally.
This type of permit enables non-citizens to reside or retire or open their own business in Mauritius and has also been extended from three to 10 years. Occupation permits issued in Mauritius should not be confused with work permits. An occupation permit is a combined work and residence permit that allows foreign nationals to live and work in Mauritius. However, this permit is only available to applicants who fall under one of three subcategories:
- sponsored professionals
- investors
- and self-employed workers.
There are many types of visas available to citizens of foreign nations who wish to enter Mauritius. However, any individuals who plan to seek gainful employment in the country will need one of the following:
- Work Permit
- Occupation Permit
- Certificate of Exemption
Most employees will need a Work Permit as well as a Residence Permit.
Procedure
Foreign nationals will need a Residence Permit as well as a Work Permit to be employed in Mauritius legally. Because both permits are necessary, applicants may fill out a common form for both permits. The form can be found on the website of the Ministry of Labour, Industrial Relations, Employment, and Training. Applicants should note that applications must be submitted online through the e-Work Permit Portal.
PERMANENT RESIDENCE PERMIT
It is a special category visa designed to attract foreign investment. The permanent residence permit is issued for ten years and is renewable, subject to the company having achieved a gross income of at least MUR4 million (approx. USD100,000) annually, as from the third year of registration. The holder is entitled to work and live. Here are the two essential conditions to hold the Mauritius permanent residence permit:
- An investor with an occupation permit and a turnover of his/ her company exceeds 45 million Mauritian Rupees during any consecutive period of 3 years.
- An investor desirous to invest at least US Dollar 500,000 in business activity stimulated by the Government of Mauritius, including Agriculture, Tourism, Banking, IT and Financials.
SELF-EMPLOYED MAURITIUS OCCUPATION PERMIT
To be eligible for this visa, you must work for yourself in a one-person business. Only people working in the service sector are eligible. The visa is valid for ten years. It is renewable if you can show that your business is successful. To do this, you’ll need to show you made at least MUR 800,000 (around USD$20,000) per year. The first two years are excluded, as the government recognizes that it takes time to start up a business.
DIGITAL NOMAD VISA
The Mauritius Digital Nomad Visa (Mauritius Premium Travel Visa) allows remote workers to live on the beautiful island of Mauritius. This visa is valid for one year but is renewable. If you intend to stay in Mauritius for 6 months or less then you are granted a Tourist visa. If you intend on staying for 12 months, then you need a Premium Visa also known as Digital Nomad Visa.
Procedure
To apply for the visa, firstly you need to check if you meet all the requirements, then head to the official EBD Mauritius Website and complete the form. It takes about 48 hours to process the application. Initiate a case for assistance.
Documents Required
- Proof of Work: Your main place of business and source of income must be outside of the country. The government does not want you to compete or enter the Mauritius Labor Market.
- Proof of Funds: Bank statement showing that you make a minimum of (R23,000 | USD 1500) per month. If you have dependents under the age of 24 this is an additional (R7,500 | USD 500) per head.
- Negative Covid Test: a certificate of a negative COVID – 19 PCR test administered between 5 and 7 days before the date of boarding at the last point of embarkation.
- Flights: a valid return air ticket to and from Mauritius
- Accommodation: Where you’ll stay during your mandatory 14 days of quarantine and post-quarantine.
- Travel Insurance for Mauritius: Use travel insurance while visiting Mauritius so you are covered for theft and medical expenses. There are a lot of fun things to do in Mauritius, and it’s best to have peace of mind while driving, hiking, and trying some of the best food in the world.
Timelines
It may take between 3 to 7 days for the application to be processed
Incentives for Doing Business in Mauritius
Mauritius offers numerous grants and incentives to investors, domestic and foreign alike. The noteworthy ones are set forth below:
Tax exemptions for entities in certain zones
As Mauritius has many export processing zones investors can take advantage of various incentives such as:
- exemption from corporate tax for up to 10 years
- exemption of customs duties on certain products
Minimal regulation on foreign exchange
- Mauritius is also preferred as it is
- high on confidentiality
- allows unrestricted repatriation of profits
- has no controls on foreign exchange
Tax incentives on CIT and withholding tax exemptions
- Setting up a global business company in Mauritius is helpful as it offers
- 3% corporate tax on global earnings
- Absence of withholding tax on interest and dividends
- It can provide services to local customers
Corporate tax exemption for IP development entities
- Mauritius has favourable terms for several industries as it offers
- An 8-year exemption from corporate taxes for companies engaged in the development of IP
- Peer-to-peer lending businesses as well as e-commerce businesses can get up to a 5-year exemption from corporate taxes
Access to a large African consumer market
The location of Mauritius is perfect for a business focused on African markets.
Low corruption levels
Low levels of corruption and low tax make Mauritius an ideal country to set up a business.
Ease of Doing Business
Mauritius is one of the most business-friendly countries on the African Continent. It has a strong framework for international business – with free trade agreements in place (SADC, COMESA, CECPA, AfCFTA, Mauritius-China FTA), 29 Investment Promotion and Protection Agreements, and 45 tax treaties. There is:
- No exchange control;
- no restriction on repatriation of profits/dividends,
- No tax on dividends and capital gains tax
Friendly Country
Mauritius has a diverse ex-pat community with an English & French-speaking population. It is also the safest country in Africa with a stable political, economic, and tropical stability climate. The country ranks 1st in Africa and 13th globally for Ease of Doing Business (World Bank’s 2020 report); the happiest country in Africa (World Happiness Report). There are daily flights to the world’s major international airports and state-of-the-art private hospitals and international schools
Conclusion
We have the local knowledge to help you navigate all these processes. Whether you want to set up in Mauritius or just want to streamline your Mauritian operations, contact us for guidance, support, and expert advice or register for Centuro Connect now to discover more information that will simplify the process of establishing entities.
