The Finance Act contains key provisions to implement certain tax and regulatory changes that will significantly impact investments in Mauritius. Specifically, the Finance Act introduces a partial exemption regime for Global Business Licence (GBL) Category 1 Companies and cancels issuance of licence for GBL Category 2 Companies.


In line with its commitment to the Organisation for Economic Cooperation and Development's drive to tackle base erosion and profit shifting between jurisdictions, the Mauritian Government has passed the Finance Act which, amongst other provisions, amends some of its local laws to curb harmful tax practices.
Specifically, the Finance Act contains certain changes that investors need to critically consider in making investment decisions.
Some of the key changes include the following:

Cancellation of Issuance of Global Business Licence (GBL) Category 1-

Effective 1 January 2019, the GBL Category 1 will be replaced with the GBL. Accordingly, GBL Category 1 Companies will simply be known as Global Business Corporations (GBC). While the GBL Category 1 offered companies holding the licence an 80% deemed foreign tax credit in Mauritius, the GBL cancels the deemed foreign tax credit system and replaces it with a partial exemption system which offers an 80% tax exemption on specified income sources which are:

– Foreign sourced dividends and profits attributable to a foreign permanent establishment;
– Interest and royalties; and
– Provision of specified financial services.

However, GBL Category 1 Companies that were issued licences before 16 October 2017 will continue to enjoy the deemed foreign tax credit system until 30 June 2021.

Introduction of Substantial Activities Requirement

The Finance Act introduces some substantial activities requirement for GBCs. A GBC must, at all times, carry out its core income generating activities in or from Mauritius by employing, either directly or indirectly, a reasonable number of suitably qualified persons to carry out the core activities. A GBC is also expected to have a minimum level of expenditure proportionate to its activities at all times.

Cancellation of Issuance of GBL Category 2-

GBL Category 2 which currently grants full income tax exemption to companies will no longer be issued effective 1 January 2019. However, GBL Category 2 Companies that were issued licences before 16 October 2017 will continue to enjoy the full tax exemption until 30 June 2021.

Introduction of Authorised Companies –

The Finance Act replaces GBL Category 2 Companies with Authorised Companies where the phrase occurs in the Financial Services Act, Companies Act amongst other laws. The Finance Act requires a company to apply for authorization where the majority of its shares or voting rights or the legal or beneficial interest in such a company are held or controlled by a person who is not a citizen of Mauritius and such a company proposes to conduct or conducts its business principally outside Mauritius or with such category of persons as may be specified. The Authorised Companies are to be treated as non-resident for tax purposes. In effect, Authorised Companies will be subjected to Mauritian Income tax based on only income derived from Mauritius.


In our earlier newsletter, we had communicated that these changes had been announced by the Mauritian Prime Minister in the Mauritian Budget Speech. (You may access our earlier newsletter via this link) The signing of the Finance Act has now given effect to the changes announced in the Budget Speech.

The introduction of the Authorised Company will enable investors who have previously used the GBL Category 2 Companies as Holding Companies (HoldCo) to continue with such HoldCo structures by applying to continue their operations as Authorised Companies subject to new regulatory requirements. However, the new substance requirements for GBCs significantly limit the ability of investors (who have previously used GBL Category 1 Companies) to use them for tax planning purposes. In certain instances, such investors may need to consider alternative business structures in other jurisdictions to ensure that they continue to enjoy certain tax benefits.

Consequently, it is imperative for taxpayers who currently have Mauritian entities to seek relevant professional advice as there may be an urgent need to restructure their Mauritian entities to align with the introduced changes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.