Mauritius is an island in the Indian Ocean located approximately 2000 kilometres from Africa and nearly about 800 kilometres from Madagascar. The largest city in Mauritius is Port Louis, its capital. After the Dutch, French, and the British colonized Mauritius, Mauritius finally gained its independence in 1968 and by adopting the new constitution, Mauritius became a Republic in the Commonwealth in 1992. Today, Mauritius is one of the very few countries that uses a hybrid legal system based on the English and French law and this developed the country from a low-income to a diversified middle-income economy that is mainly focussed on industrial, financial, and tourism sectors. In addition, World Bank 2016 also ranks Mauritius as the 1st country in Africa to do business in, for 8 years in a row. As a result of that, many see Mauritius as the economic leader and well-known offshore centre in the African region hence foreign investors are seriously considering the island an option to form their offshore companies in.
Setting Up an Offshore Company
The ideal way to set up an offshore company in Mauritius is to use the GBC1 structure. GBC1 companies, previously known as offshore companies, are companies formed under the Companies Act 2001 and it is currently regulated by the Companies Act 2001 and Financial Services Development Act 2001.
One of the significant advantage to set up a Mauritius offshore company (GBC1) is the tax structure favours the local residents. Therefore, this allows the company to avoid double taxation treaties signed by other countries worldwide including Belgium, Botswana, China, France, Germany, Cyprus, India, Italy, Indonesia, Lesotho, Kuwait, Luxembourg, Malaysia, Madagascar, Mozambique, Nepal, Namibia, Oman, Pakistan, Singapore, Russia, Sri Lanka, South Africa, Swaziland, the United Kingdom, Sweden, and Zimbabwe. With all these double taxation treaties signed, Mauritius is a very attractive place to invest and form an offshore company in because the company can withdraw the profits from those countries without having any taxes imposed upon the company.
Some of the benefits of forming an offshore company in Mauritius include:
- Exemption from legal taxes
- No need for accounting and reporting activities
- The offshore company can conduct business internationally
- High level of privacy protection by structuring shareholding using nominee directors and shareholders
- The company only needs one director and one shareholder for the incorporation
- No minimum capital required
- Offshore company enjoy limited liability without any paid up capital
- The formation of the offshore company only takes up to 48 hours and DHL will ship the corporate documents within 7 to 10 working days
Although setting up a GBC1 company in Mauritius can enjoy the double taxation treaties, it is also subjected to 15% tax on the profit. However, the company can claim 80% foreign tax credit of the tax payable. Therefore, after deducting that, the net effective rate for the foreign tax credit is only 3% while the company gets itself exempted from paying capital gains taxes.
To fully own the company, the company only needs a shareholder and bearer shares are not allowed. The company also have to report its shareholder’s information and details to the Companies Registry and Financial Services Commission and only the shareholders have the right to inspect. Information including the beneficial owners’ references, details on track record, and copies of the passport must also be submitted to the Financial Services Commission. If the beneficial owners are corporations, they need to submit the latest audited accounts and corporate profile to the Financial Services Commission.
The company must have a local resident as the director and the regulating bodies do not allow corporate directors. The director then have to give his permission to act as director by filling up the form 7 with the Registrar of Companies. Again, only the shareholders can inspect this form. Whenever there is a change in directors, the company needs to inform the Registrar within 28 days from the date of the change. It is also important to understand for the company to enjoy the double taxation treaties, the company requires at least two approved residents by the Financial Services Commission
A GBC1 company also have to file its audited accounts within 6 months based on the close of its financial year. Failure to do so may result in having the business license revoked by the authorities. The GBC1 can prepare its financial statements using the International Accounting Standards or internationally well-known any accounting standards. The company have to prepare its audited accounts within any period of between 6 to 15 months based from the date of incorporation and it cannot exceed 12 months for the next subsequent financial year submission.
It will take approximately 10 days to incorporate the offshore company subject to the name approval. Unlike other offshore centres, ready-made or shelf companies are not available because the company needs to report the beneficial owner’s details to the Financial Services Commission.
In terms of name usage, the companies are not allowed to use English words including Authority, Chamber of Commerce, Chartered, Cooperative, Fund, Government, Insurance, Investment, Management Services, Mauritius, Municipal, National, Regional, Presidential, Republic or State. The company is also required to put Limited or Corporation behind its proposed name.
It is mandatory to open a bank account in order to form an offshore company in Mauritius. Local agents recommend to open bank accounts with well-known international banks such as Hong Kong Shanghai Bank (HSBC) or Barclays Bank Plc. The company also needs to provide a locally registered address in Mauritius as their registered office.
Finally, to set up an offshore company in Mauritius, the company have to obtain a Certificate from the Mauritius Tax Authorities to state that the company has complied with the relevant requirements and it is now considered as a Mauritius tax resident company and hence enjoy double taxation treaties.
Recommended Business Industries
The recommended business industries to form an offshore company in are:
- Internet commerce or e-commerce
- International business
- Consultancy services
- Counselling services
- International trading
- Protecting intellectual property rights
- Protecting real estates
- Protecting inheritance