Considered among one of the leading international financial centres by the African and global business community, Mauritius is the preferred platform for doing business in Africa, ranking 1st on the continent for ease of doing business in 2020. The country has an attractive business environment and, coupled with a strong regulatory environment, attracts many corporates, entrepreneurs, investors and High Net-Worth Individuals.
Mauritius has the perfect ecosystem for conducting business in and outside of the country, for wealth management, for retirement and for relocation: Nitin Collappen and Nikhel Chung Sam Wan, key partners of Centurion Law Group and experts in offshore company formation in Mauritius, explain why.
Doing Business in Mauritius
Mauritius presents many business opportunities for savvy investors and business executives. Setting up a business is quick and easy – taking on average 3 days. Businesses can be 100% foreign owned or partnered with Mauritian Nationals.
Companies can be in the form of domestic companies, which are also revered as the best alternative to offer services to Mauritian residents. Offshore companies (the Global Business Company and the Authorised Company) on the other hand, are ideal for doing business at international level.
The International Financial Centre of Mauritius features distinctive tax and non-tax benefits that attracts businesses and investors around the world.
An attractive tax system
Mauritius’ attractive tax system include:
- Corporate and personal tax rate of 15%. Some categories of foreign income for corporates can benefit from an 80% exemption based on certain criteria, which allow them to benefit from a corporate tax of 3%;
- No foreign exchange controls: in other words, free repatriation of funds is allowed, no authority consent is needed for the repatriation of funds received at Mauritius level which can be in the form of profits, dividends, fees earned from consultancy services etc. earned by a foreign investor in Mauritius. Apart from complying to the normal AML/CFT laws and regulations, a foreign investor does not have to seek any authority`s consent for the free movement of his funds abroad and in the country;
- No Capital Gains Tax, no property tax and no inheritance tax;
- Rebate schemes for some specific types of exports;
- No customs duty on specific equipment – for example, exemption from customs duty is granted for specific equipment such as:
- Machinery and materials for the manufacture of solar water heaters,
- Equipment and specialised spare parts for machinery, to be used exclusively in agriculture and agro-based industry for the production of sugar and electricity, and
- Prefabricated building materials for companies involved in the construction sector; amongst others (click here for more details).
- Dividends not subject to tax;
- Free repatriation of profits, dividends and capital;
- Dividends from foreign sources are subject to an 80% partial exemption: both domestic and Global Business Companies (although subject to an income tax rate of 15%) are eligible to claim a partial tax exemption of 80% on certain income types (including dividends from foreign sources, interest income, and ship/aircraft leasing), subject to satisfying specific substance requirements.
- Double Tax Avoidance Agreements (DTAAs) with over 40 countries (including with major African countries including South Africa, Kenya, Senegal, Rwanda, Mozambique and Namibia), which aim to promote cross-border investment between the contracting countries.
A DTAA’s main objective is to avoid foreign investors being taxed twice for the same income. It applies in cases where a taxpayer resides in one country and earns income in another.
For example, under the domestic law of Kenya, dividends paid to foreign investors for withholding tax rate are at 10% but with the DTAA between Mauritius and Kenya, the rate is reduced to 8%, provided of course that the investors meet the applicable substance criteria’s in Mauritius.
The plethora of advantages of doing Business in Mauritius
The other advantages that Mauritius offers as a compliant and reliable platform for doing business include its strong and diversified economy, and stable political and social environment. In addition, the country is widely acclaimed for its business-friendly and investment-friendly jurisdiction, with sound legal and regulatory frameworks and a transparent and internationally-compliant jurisdiction (BEPS Action 5, EU tax good governance principles, FATCA, CRS, etc).
Additional advantages of doing business in Mauritius include its highly-skilled and bilingual workforce (English and French), its well-developed banking sector and its securing of ownership rights. As a result, Mauritius ranks 1st in Africa in the World Bank’s 2020 Doing Business Ranking (and 13th internationally!), and 21st globally on the 2020 Index of Economic Freedom.
The country has long-standing cooperation agreements with most African and international bodies, including the Africa Union, the Southern African Development Community and the Common Market for Eastern and Southern Africa (COMESA), making it an ideal platform between Africa and Asia. Finally, its social infrastructure is also amongst the most developed globally, with high-standard boarding schools and universities, and a modern healthcare system.
The Global Headquarters Administration Licence
Many multinationals choose the Mauritius International Financial Centre to establish their Headquarters. Introduced in 2016, the Global Headquarters Administration licence is a strategic move by the Mauritian government to establish and strengthen the position of Mauritius as the leading regional financial and business hub for multinational companies doing business in Africa. With this licence, multinational companies are allowed to set up their regional administration, procurement and accounting offices in Mauritius.
The Global Headquarters Administration licence acts as a central pillar for the ease of doing business on the island. Companies holding this licence have to employ ten Mauritius-resident full time professionals with at least two at managerial level. The professional can be an expatriate who is based in Mauritius and is any person who is involved in the main activities of the company.
It allows multinational companies to provide headquarter services, namely business planning, development and coordination, general organisation and administration; and economic research and analysis.
Moreover, companies holding a Global Headquarters Administration licence provides are eligible to an eight-year tax holiday on all income generated by the company from its HQ activities, provided it satisfies the licencing requirements.
Important note: A foreigner heedless of nationality may hold 100% shares when incorporating a company given that at least one director resides in Mauritius and complies with the section 52.6 of the Companies Act 2001 regulation.
Mauritius: the first country to issue the Custodian Services Licence for Digital Assets
A further proof of Mauritius being a business and investment hub-is the implementation of a licensing framework for the custody of digital assets. The Custodian Services Licence allows its holder to provide safekeeping services linking to Digital Assets.
This license encourages investments in digital assets by professional investors, Expert Funds and Specialised Collective Investment Schemes. This further upgrades Mauritius’ market surveillance, IT security, asset protection, ease of doing business and the country’s transparency. In fact, with the digitisation of assets and transactions, Mauritius has set its sight on becoming a Fintech hub.
Fintech will contribute, without doubt, to the development of the Mauritius International Financial Centre. Fintech provides the opportunity to offer value-added and innovative services, and enhances the attractiveness and competitiveness of the Mauritius for such activities.
Number one Wealth Market in Africa
According to the Africa Wealth Report, from 2017 to 2018, Mauritius experienced an upsurge of 20% of the number of millionaires coming to invest or to do business on the island. Between 2008 and 2018, Mauritius wealth market grew by 124%, the second fastest-growing wealth market globally (after China) – the report confirms. During this period, a large number of High Net-Worth Individuals (HNIs) – coming mainly from Europe and Southern Africa – moved to the island. Today, Mauritius is home to around 4,400 HNIs, compared to only 1,800 ten years ago.
Many businesspeople come to Mauritius to benefit from the advantages the jurisdiction offers. to business executives, institutional investors and HNWIs alike. These notably include an international arbitration centre, a hybrid legal system, combining the Civil and Common law, and a cost-efficient tax system.
For a non-citizen, having a foot in the Mauritian ecosystem, either through the ownership of a company or by being resident through the acquisition of a property, or both, enables them to do business globally without any restrictions, subject to complying with the laws and regulations.
In addition, non-citizens can also do their estate planning while setting up their corporate structures in Mauritius. Wealth planning and management can happen immediately if the person has already accumulated cash and assets. If the lifecycle of the corporate structures are not mature enough, this can be done at a later stage.
The country is less than 5 hours away from South Africa and within 6½ hours from Dubai. Entrepreneurs, businesspersons, multinationals, SMEs, HNIs and Ultra High Net-Worth Individuals (UHNWIs), families who have relocated, and people who have retired, are enjoying the Mauritian ecosystem; be it for the ease of doing business at international level or for the quality of life. The investment earmarked by the authorities to enhance the positioning of the country against international indices will be over $3bn for the fiscal year 2020/2021.
Contact Ms. Keseena Chengadu at keseena.chengadu@centurionlg.com for more details.
Authors:
Mr. Nitin Collappen has over 18 years’ experience in the financial services industry.
Mr. Nikhel Chung Sam Wan has over 10 years of experience in the financial services industry, and acts as a Director for numerous offshore companies, including sovereign wealth funds, listed and multinational companies.
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Ms. Keseena Chengadu (Head of Africa Investment Desk)
With over a decade of hands-on international investments experience, Keseena is a powerhouse for Africa-bound investment structuring. She has advised a cross-section of institutional, government entities and private investors on business structuring within Africa and is a household name in energy sector investment.
