The Environment

Mauritius is well known as a high-class tourist destination. In 2008, it is expected to attract over 1,000,000 tourists. The other pillars of the economy are sugar production, information technology and textile exports. Since 1992, Mauritius has also developed a renowned International Financial Services Centre providing quality services.

Mauritius is an island of 1,830 km2, located in the Indian Ocean, 1,500 miles east of Africa. Its population of 1.25 million inhabitants comprises a majority of people of Indian origin, next to descendants of African, Chinese and French immigrants.

Mauritius is a country with a unique legal tradition, based on English and French laws. The Judicial Committee of the Privy Council of the United Kingdom is the Court of Final Appeal.

The International Financial Services Centre

Mauritius has matured into a successful International Financial Services Centre (IFC) with strong regulation. It has never been blacklisted by any international standard-setting body and promptly took commitments towards the Organisation for Economic Co-operation and Development (OECD) after its report on Harmful Tax Competition.

Mauritius is now well positioned on the global financial scene with respect to its taxation, anti-money laundering, corporate governance, compliance, trust and estate and other related policies. This has propelled the island to the status of a sound and major IFC. The advantages offered by Mauritius, some unique, explain its rapid expansion. Let us name a few:

  • Precise legal, judicial and administrative framework; the rule of law is well-established and respected, in line with Anglo-Saxon tradition;
  • Political stability;
  • Pro-active government favouring foreign investment and the private sector;
  • Supervision of the non-bank financial services sector by the Financial Services Commission;
  • Member of the Egmont Group, Global Tax Forum and others;
  • Located in a strategic time zone, making it possible to communicate with the Far East and Europe’s during normal business hours;
  • Fluency in both English and French, either of these being allowed in original documents;
  • Long term commitment and strong governmental support to the financial services and particularly the "global business" sector;
  • Mauritius has entered into various Investment Promotion and Protection Agreements (IPPA) for the protection of assets and property;
  • Excellent telecommunication facilities;
  • Easy access: daily direct flights from and to major Asian and European cities;
  • No foreign exchange controls;
  • Tax incentive companies and other legal entities;
  • Pool of highly qualified professionals fluent in both English and French; and
  • 33 Double Taxation Agreements (DTA), with more under negotiation.

The Global Business Sector

Besides setting up a trust, non-residents can incorporate companies, sociétés and partnerships in Mauritius. The activities performed by non-residents using these legal entities are called "global business activities". Some of these activities, as defined by law, require a category 1 licence (GBL1 - banking, investment funds, insurance and re-insurance, protected cell companies, etc.). For other activities, a category 2 licence (GBL2) will be issued; GBL2 companies are not subject to any taxation and are in fact comparable to the "International Business Companies" found in other jurisdictions such as the Seychelles.

GBL1 entities can benefit from DTA and are taxed on their income at the rate of 15%. They 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 rate of taxes paid is therefore between 0% and 3%. There is no capital gains tax, and no withholding tax on distributed dividends and interest paid to non-residents.

To date, Mauritius has signed and ratified 33 DTA. Most of these DTA present uniquely attractive features, such as those with 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.

Trusts

Mauritius also has a very good legal framework for the setting up of trusts for estate planning, tax planning, managing property and asset protection, among others. Various types of trust can be established in order to cater for the specific needs of clients. Among these include discretionary trusts, being mostly used by non-residents in Mauritius and in other offshore jurisdictions.

Over and above the basic features of a trust, the Mauritius Trusts Act 2001 provides for, inter alia, for: (i) the office of the Protector, in order to assist Settlors from civil law countries, for whom the trust concept of totally giving away all of one’s wealth to trustees without any further control or influence may be difficult; (ii) no forced heirship rules, contrary to the laws of most civil law countries; (iii) the possibility of segregating the office of managing trustee and custodian trustee so as to allow change in trusteeship without the need to vest the trust property, which may be substantial or complexly arranged, in a new custodian trustee; and (iv) tax-exempt trusts for trusts of which the Settlor and the beneficiaries are non-residents in Mauritius and no tax payable by beneficiaries upon distribution.

Other Developments

Mauritius possesses other attractive investment and tax efficient vehicles such as Investment Funds, Protected Cell Companies, Private Trust Companies, Hybrid Companies, to name but a few. It is also now open for non-residents to work, live in, and become permanent residents of, Mauritius and to own a piece of this paradise island through recently established schemes, such as the Integrated Resort Scheme (IRS) or the Real Estate Development Scheme (REDS). Investment on the Mauritius Stock Market is also available, such investments carrying returns of the order of about 50% on the amount invested for the year-ended 2006 and currently being around 40% as at date.

Conclusion

Mauritius offers excellent opportunities for foreigners, not only for leisure, but also to do business. There is a wide array of financial services to suit the needs of each of them, from the layman to the most sophisticated investor. Such services can also be complemented with the appropriate corporate or other legal structures, affording the optimum protection at costs which are considered to be reasonable as compared to the already over-burdened and expensive other IFC.

The Government of Mauritius is sparing no effort to see to it that Mauritius keeps enhancing its image as a sound IFC and as a bridge between countries in Asia, Europe and Africa. Every year, new measures are being implemented and incentives provided - tax or otherwise - in order to attract more businesses of substance into Mauritius.

Head Office

European Office

Suites 340-345 Barkly Wharf
Le Caudan Waterfront
P.O. Box 1070, Port Louis
Republic of Mauritius

8, Place du Bourg de Four
P.O. Box 3627
CH-1211 Geneva 3
Switzerland

Tel. (230) 210 1000
Fax. (230) 210 2000

Tel.: (41) (22) 818 61 00
Fax: (41) (22) 818 61 01

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.