Located on the southeast coast of the African continent, Mauritius is an island nation that is surrounded almost entirely by a coral reef. Sounds perfect for a sunny holiday by the blue sea? But Mauritius is, in fact, known for its ideal business environment. It is where most investors look for when they decide to go offshore.
1. Doing business in Mauritius – A quick glance
During the past years, Mauritius has gone out of their way to gain a solid reputation as a secure and reliable investment destination when it comes to stable governance, transparency, ethics, economic, and political freedom.
There are several types of legal entities that are available to foreign investors inside of Mauritius, including Global Business Corporation (formerly known as GBC1), Authorized Company, Funds, Protected Cell Company, Limited Partnership, and Limited Life Company.
However, in this blog, we only dig into details with the two most popular types, which are Global Business Corporation and Authorized Company (both of them are offshore companies).
2. Global Business Corporation (GBC) in Mauritius
The GBC (formerly known as GBC1) is registered under the Companies Act 2001 and licensed by the Financial Services Commission. Foreign investors mainly open a GBC in Mauritius to be used for Financial Services business (though it is subject to additional licenses) and for investment holding businesses (particularly when their overseas income is primarily from dividends, interest, and capital gains).
GBC is eligible for taking advantage of the Double Tax Agreements (DTA). This makes it a potent corporate vehicle for international tax planning.
2.1. Initial requirements to set up a Global Business Corporation in Mauritius
According to the law, a GBC must operate its core income-generating activities inside or from Mauritius. It means that a GBC must hire a reasonable number of employees, whether directly or indirectly, to carry out its business activities. Plus, it also has a minimum number of expenses in appropriate proportion to its activities.
A GBC must also be managed or controlled within Mauritius and more importantly, be administered by a Management Company – the middle man between a GBC and the FSC.
One thing to keep in mind, two local directors must be assigned (the minimum number of directors) and the BoD meetings must be organized in Mauritius.
The company is required carry out a registered office in Mauritius. Also, all of the documents such as accounting records, statutory documents must be kept in the office at all times.
It is vital to have a qualified company secretary (either firm or individual) who is a Mauritius resident.
A GBC also has to file and submit a return of income within 6 months after its accounting period ends, and of course, pay any payable taxes in that period. Likewise, an audited profit and loss account and balance sheet annually are compulsory. This has to be done within 6 months after the financial year ends. All accounts must be filed in accordance with international accounting standards. Plus, tax returns are needed to be submitted with Income Tax Authorities.
On top of all this, OECD’s widescale Base Erosion and Profit Shifting (BEPS) framework have also now come into play. As a result, the Mauritius Economic Substance rule was amended into the Income Tax Act which stipulates specifics as to how a GBC can comply with this new regime.
Comments