Until now, Mauritius has signed and ratified thirty three double taxation agreements (DTA). Most of these DTA present uniquely attractive features, such as those with the United Kingdom, Luxembourg or South Africa. The one with India is widely known and used. The agreements with the People’s Republic of China, Singapore and Indonesia (under renegotiation) are the best these countries have ever entered into with Mauritius.
The Global Business Sector
The activities performed by non-residents through Mauritius companies, trusts, partnerships, sociétés and other approved corporations are called "Global Business" activities. Some of these activities, as defined by the law (for example: asset management, mutual funds/collective investment schemes, leasing, consultancy services, financial services, insurance, protected cell companies and any other activity as may be approved by the Financial Services Commission), require a global business licence category 1 (GBL1). For all other activities, a global business licence category 2 (GBL2) will be issued; these companies are not subject to any taxation and are in fact comparable to the International Business Companies found in other (offshore) jurisdictions. GBL2 are easily set up and are mostly used for trading, international contracts, holding assets worldwide, among others.
A GBL1 can benefit from DTA and is taxed on its income at the rate of 15%. It can deduct the foreign taxes paid (foreign tax credit) up to the amount of tax due in Mauritius. In the absence of proof, the amount of foreign tax paid is presumed to be 80% of the Mauritius tax (deemed foreign tax credit). The effective amount of taxes paid by a GBL1 company, trust, partnership or société in Mauritius is between 0% and 3%. There is no capital gains tax, nor any withholding tax on dividends distributed and interest paid to non-residents.
Mutual Funds/Collective Investment Schemes
Mauritius is a platform for open-ended funds, with a large number of these funds being listed in Mauritius and/or on major international stock exchanges such as London, Luxembourg and Dublin. As of now, there are more than 350 mutual funds/collective investment schemes with a net asset base of over US$ 30 billion. The bulk of these investments is directed towards India, China and South Africa.
Mauritius seeks to consolidate and develop further its mutual funds/collective investment schemes client base by emerging as a worthy alternative to the already overburdened and comparatively costlier international financial centres in the Caribbean-Pacific region.
Protected Cell Companies
Mauritius introduced the Protected Cell Company (PCC) in 1999. Essentially, it allows for the creation and the legal segregation of an indefinite number of cells within one and same company - each cell has assets and liabilities attributed to it, and its assets cannot be used to meet the liabilities of any other cell.
The PCC also has non-cellular (core) assets which may be available to meet the liabilities that cannot be attributed to any individual cell. Thus, different risks within one company can be ring-fenced through the use of cells and this feature makes the PCC attractive for insurance (including long-term and re-insurance), captive insurance purposes and for collective investment fund structures, asset holding and structured finance businesses.
As a GBL 1, the PCC will also be granted access to DTA and hence obtain favourable tax treatment, while being taxed as a single entity. A PCC could be used to hold specific portfolios of assets in cells for different high net worth individuals or different members of a family, possibly managed by different asset managers.
The author is Managing Director of AAMIL Ltd, corporate financial services provider. The Group is also providing trustee and asset management services. The offices are in Port-Louis (Mauritius), Geneva (Switzerland), Victoria (Seychelles), London (UK), Grand-Duchy (Luxembourg) and Mumbai (India).
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Head Office |
European Office |
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Suites 340-345 Barkly Wharf |
8, Place du Bourg de Four |
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Tel. (230) 210 1000 |
Tel.: (41) (22) 818 61 00 |
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.
