Mauritius is a sub-tropical volcanic island situated in the Indian Ocean, 2400 kilometres off the South East Coast of Africa and covers an area of 1,865 square kilometres. The population of the island is approximately 1.2 million comprised of people of Indian, African, European and Chinese origin. Due to its past history as a colony of both France and Britain, the population is largely bilingual in English and French. The official language is English but "Creole" is widely spoken in the island.
The Republic of Mauritius is a Westminster style democracy headed by an appointed President who is the Head of State. The sixty members of Parliament are elected every five years by popular vote. Parliament is the legislative authority in Mauritius and is headed by the Prime Minister who is the Head of Government.
Mauritius is one of the few countries with a hybrid legal system based on English and French law. The procedural law both in criminal and civil litigation is mainly English whilst the substantial law is mainly based on the French Napoleonic code. The Company Law is modeled on the English and New Zealand law. The highest court of appeal is the Privy Council in England.
GBC1 Companies, which were previously known as "Offshore Companies", are formed under the Companies Act 2001 and now regulated by the Companies Act 2001 and Financial Services Development Act 2001. The substantial advantage offered by the GBC1 company is that it may be structured to be tax resident in Mauritius, and may thereby access the taxation treaties signed by Mauritius with Belgium, Botswana, China, Cyprus, France, Germany, India, Indonesia, Italy, Kuwait, Lesotho, Luxembourg, Madagascar, Malaysia, Mozambique, Namibia, Nepal, Oman, Pakistan, Russia, Singapore, South Africa, Sri Lanka, Swaziland, Sweden, Thailand, U.K, Zimbabwe. This makes it extremely attractive to invest in one of these countries through a Mauritius GBC1 Company as taxation treaties provide that profits can then be withdrawn from that country either without the imposition of withholding tax or subject to a substantially reduced rate of withholding tax.
The terms of the taxation treaty signed between Mauritius and India are particularly advantageous and the levels of taxation paid by a Mauritius GBC1 company making profits in India are considerably reduced from the normal levels of taxation which would be suffered by a company investing directly in India.
India still imposes restrictions on investments in and out of the country and therefore requires that any investment into India by a foreign company or individual is approved by the Reserve Bank of India. Frequently the approval process takes a considerable length of time and results in onerous conditions being placed upon the investment. However, if a Mauritius GBC1 is incorporated, this can be used for holding Indian investments. Please note that some investments require the prior approval of the Foreign Investment Promotion Board in India.
The benefits accruing to a Mauritius GBC1 company when used for investment in India may be summarised as follows:
Dividends: Although the dividend withholding tax has been replaced by the dividend distribution tax, it is well known that Indian authorities can easily re-introduce this tax in the future. In such a case, the dividend withholding tax will be reduced to 15% under the Mauritius/India treaty provided that the Mauritius company holds at least 5% of the equity in the India subsidiary.
Royalties: The usual rate of withholding tax is 30% (this can be reduced to 20% under certain conditions). If royalty payments are made to Mauritius then the withholding tax is reduced to 15%.
Interest: The usual rate of withholding tax on interest payments made to a non-resident is 20% but under the Mauritius treaty the rate is reduced to 0% if the loan is made to a Mauritian resident bank or a government body.
Capital Gains: Long term capital gains i.e. gains made on sale of assets held for more than 12 months would normally be taxed at 20% but under the Mauritius/India treaty those gains are exempt from tax in India. Similarly short term capital gains made by a Mauritius company in India will be exempted from tax in India. The normal rate would be around 33%.
GBC1 companies structured to take advantage of the taxation treaties signed by Mauritius must have the following characteristics:
Shareholders: The company can be wholly owned by 1 shareholder. Bearer shares are not allowed. Details of the shareholders must be reported to the companies registry and to the Financial Services Commission. Only shareholders have a right of inspection. Please note that references, details on the track record and passport copy of the beneficial owners must be given to the Financial Services Commission. Where the beneficial owners are body corporates, latest audited accounts and corporate profile must be submitted to the Financial Services Commission.
Directors: A company shall have at least one director who shall be ordinarily resident in Mauritius. Corporate directors are not permitted. A Director is required to give his consent to act as Director by filing form 7 with the registrar of companies. Shareholders have the right of inspection. The registrar shall be notified within 28 days of any change in Directors. It is important to note that if the company wishes to access the taxation treaties then 2 Mauritius resident directors, who are approved by the Financial Services Commission, must be appointed.
Officers/Secretary: A qualified resident company secretary must be appointed.
Restriction on Name & Activity: The following words cannot be used in English or any other language: Authority, Bank, Chamber of Commerce, Chartered, Cooperative, Fund, Government, Insurance, Investment or Management Services, Mauritius, Municipal, National, Regional, Presidential, Republic or State. Names should end with Limited or Corporation.
Local Requirement: The company must maintain a registered office in Mauritius at the address of a licensed management company or law firm.
Timescale: Subject to name approval a GBC1 company can be incorporated within 2-3 weeks. Readymade companies are not available because of the need to report the details of the beneficial owners to the Financial Services Commission.
Annual Reporting: A GBC1 company must file audited accounts within 6 months of the close of its financial year. Non-compliance may result in revocation of the global business licence. A GBC1 may prepare its financial statements in accordance with the International Accounting Standards or with any other internationally accepted accounting standards.
Taxation: GBC1 are subject to 15% tax on profit but the company is entitled to a deemed foreign tax credit of 80% of the tax payable i.e. the net effective rate after deduction of the deemed foreign tax credit is 3%. Capital Gains are exempted from tax in Mauritius.
Confidentiality:Beneficial ownership is not available on public record.
Company Renewal:Renewals for Mauritius GB1 companies to be done before 30th of June irrespective of the date of incorporation. In case of late renewal, government and service charges shall be applicable for late payment of it’s annual license.
Financial summary of the company along with the latest valid passport copy and recent utility bill for address proof of shareholder/director are required to be submitted at every renewal as a part of enhanced due diligence. If shareholder is a corporate entity, then latest certificate of incumbency and above stated docs of directors would be required.
KYC Documents for individual Director/Shareholder
KYC for Corporate Director/Shareholder
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal, tax or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.