Mauritius is internationally recognized as one of the friendliest countries for foreign investors, especially investors who wish to set up international companies that do not necessarily trade in Mauritius alone. This is principally due to its tax regime which is favourable to investors and also due to the relative ease with which investors are able to set up business.
Investors who want to conduct business outside Mauritius can benefit from Mauritian tax regime by establishing global business (GB) companies in Mauritius.
There are two types of GB companies. These are GB Category 1 (GBC1) and GB Category 2 (GBC2).
The main difference between a GBC 1 and a GBC 2 is that while a GBC 1 is a corporation resident in Mauritius for tax purposes, a GBC 2 is not a corporation resident in Mauritius for tax purposes and hence not liable to tax in Mauritius.
Below is a summary of the major characteristics of GBC 1 and GBC 2 companies.
A GBC 1 is a company resident in Mauritius but can only conduct business outside Mauritius.
A GBC 1 is a resident company in Mauritius for taxation purposes and therefore liable to tax in Mauritius. A GBC 1 can benefit from double taxation agreements that Mauritius has with other countries.
So far, Mauritius has concluded 35 double tax agreements. Some of the countries which Mauritius has double tax agreements in force are France, China, Uganda, Tunisia, United Arab Emirates, Mozambique, India, Rwanda, South Africa and Botswana. There are also treaties which are awaiting ratification. Examples are treaties with Kenya, Egypt, Russia, Malawi, Nigeria and Zambia.
The central management and control of a GBC 1 must be situated in Mauritius. Obtaining a tax residency certificate from the Mauritius Revenue Authority is evidence of this.
In determining whether a company should be granted a GBC 1 licence, the FSC considers whether the company is managed and controlled in Mauritius taking into account the following:
- The company must have at least two (2) resident directors. The concept of nominee directors does not exist in
- The company's principal bank accounts must be in Mauritius;
- The company's statutory statements must be filed in Mauritius;
- The company's books of accounts must be prepared in Mauritius and must be audited;
- Meetings of directors must include at least two directors from Mauritius; and
- The company secretary must be the management company itself.
A GBC 1 is required to file annual audited financial statements with the FSC within six (6) months after the close of its financial year. A GBC 1 must also submit income tax returns to the Commissioner of Income Tax every year.
There are several tax benefits enjoyed by a GBC 1. A GBC 1 is taxed at a flat rate of 15%, although foreign tax credits are allowed for taxes suffered at source where it can be evidenced.
A system of deemed foreign tax credits of 80% reduces the income tax to 3% on the income of the GBC 1. In a case where foreign taxes are more than 12%, the actual tax rate in Mauritius can be less than 3%.
Apart from the favourable income tax chargeable to GBC 1 companies, there are other favourable tax considerations relating to withholding tax and capital gains tax.
Under the Mauritian tax regime, there are no withholding taxes on dividends distributed by a Mauritian company to its non-resident an resident shareholders or to interest paid to a non-resident having no place of business in Mauritius.
There are also no capital gains taxes in Mauritius and any gains realized by a non-resident or resident shareholder on disposition of its shares in the company would not be liable to tax.
A GBC 2 is not resident in Mauritius for tax purposes and is therefore not liable to tax in Mauritius. A GBC 2 company also cannot benefit from double taxation agreements. The FSA provides certain restrictions on the business that may be conducted by a GBC 2. GBC 2s are restricted from providing banking or financial
services; holding or managing or otherwise dealing with an investment fund or scheme as a professional functionary; providing of registered office facilities, nominee services, directorship services, secretarial services or other services for