Mauritius
Company formation

Strategically positioned in the Indian Ocean, Mauritius, often referred to as the Star and Key of the Indian Ocean, has been a hub for international business and investment for decades. Its political stability, progressive economic policies, and well-developed financial services sector make it an attractive destination for entrepreneurs and investors alike. The Mauritian government’s commitment to fostering a robust business environment has led to the evolution of a mature financial ecosystem that is conducive to trade, investment, and company formation.

Over the years, Mauritius has transformed itself from a mono-crop economy to a diversified financial center of excellence. The country’s progressive approach to business is underpinned by its sound regulatory framework, ease of doing business, and a forward-looking strategy. The country has successfully signed a plethora of bilateral treaties and agreements, promoting trade and protection of investments. Its geographical location serves as a bridge between Africa and Asia, making it an essential pivot for business expansion into these regions. The cosmopolitan culture, coupled with its highly skilled bilingual workforce, further adds to its allure for entrepreneurs and corporations worldwide.

Why opening a company in Mauritius

Mauritius offers a compelling blend of fiscal and structural advantages for entrepreneurs. Its attractive tax regime, combined with the ease of doing business, makes it an appealing destination for company formation. Entrepreneurs seeking to tap into the African and Asian markets will find Mauritius particularly beneficial due to its strategic location. Moreover, those looking for efficient tax planning will appreciate the country’s low tax rates and the absence of capital gains tax. The local government actively supports and encourages foreign investments, especially for those in the financial, tech, and service sectors.

Advantages

Strategic Location

Mauritius’s geographical positioning between Asia and Africa renders it a gateway for businesses targeting these markets. Its time zone harmoniously aligns with major global business hubs, facilitating seamless communication and operations with European, African, and Asian counterparts without significant time disparities.

Attractive Tax Regime

Not only does Mauritius offer a competitive flat tax rate of 15%, but it also boasts the absence of capital gains tax. This low-tax environment is further enhanced by an extensive network of Double Taxation Avoidance Agreements, ensuring international businesses and investors experience tax efficiencies on both local and global fronts.

Robust Regulatory Framework

The Mauritian government has prioritized establishing a sound regulatory framework to inspire investor confidence. This is evident in its commitment to international best practices, transparency, and a focus on combatting financial malpractices. The Financial Services Commission (FSC) regularly updates its regulations to align with global standards, ensuring Mauritius’s financial sector remains reputable.

Skilled Workforce

Mauritius boasts a highly educated, bilingual workforce, with many professionals fluent in both English and French. This is an invaluable asset for businesses looking to serve diverse markets. The government also continually invests in education and training, ensuring a steady stream of qualified professionals in sectors like finance, IT, and services.

Stable Political Climate

Political stability is often a key consideration for investors and businesses looking to establish a presence in a new country. Mauritius has a long history of democratic governance, and its political landscape is characterized by stability, transparency, and the rule of law.

Disadvantages

Perception as a Tax Haven

Despite its robust regulations and compliance with international standards, Mauritius has sometimes been perceived as a tax haven. This can potentially lead to skeptical views from global entities and might pose challenges in forming partnerships or business relations in certain jurisdictions.

Limited Domestic Market

While Mauritius offers a strategic gateway to larger markets, its local consumer base is relatively small. Entrepreneurs focused primarily on local sales might find this limiting, especially if their product or service targets a niche segment.

Dependence on External Markets

Mauritius’s economy is significantly reliant on external markets for trade, tourism, and financial services. Any global downturn or disruptions in these markets can have a magnified impact on the Mauritian economy, potentially affecting businesses operating there.

Regulatory Changes

While the Mauritian regulatory framework is robust and aligns with global best practices, there are occasions when sudden regulatory changes or shifts in policy can occur. This can sometimes pose challenges for businesses that need to rapidly adjust to new compliance requirements or operational practices.

Infrastructure Constraints

Though Mauritius has made commendable strides in infrastructure development, certain areas still need improvements. There can be occasional challenges related to transportation, utilities, and telecommunications, especially when compared to larger, more developed economies.

Taxes

Mauritius has positioned itself as a low-tax jurisdiction with a plethora of fiscal benefits for businesses. The standard corporate tax rate stands at 15%, but various exemptions and incentives can further reduce the effective tax rate for specific sectors. Additionally, there is no capital gains tax, and dividends are tax-exempt, ensuring that businesses and investors retain a larger portion of their profits. The country has also entered into numerous Double Taxation Avoidance Agreements (DTAAs) with major global economies, preventing the same income from being taxed in two different countries.

Company types in Mauritius

Global Business Company (GBC)

The GBC is tailored for international businesses that aim to manage and control their operations from Mauritius. It can conduct business globally and benefits from a resident tax status, thus enjoying the benefits of Mauritius’s extensive tax treaty network. Being tax-resident, GBCs can avail treaty benefits with countries like India and South Africa, which make them an attractive proposition for businesses aiming to minimize global tax exposure.

Domestic Company

Domestic companies in Mauritius are suited for entrepreneurs intending to do business within the Mauritian territory or those not seeking to avail tax treaty benefits. They can be either public or private, and their primary operations are often linked to the domestic market. Domestic companies are regulated under the Companies Act of Mauritius and are subject to local tax laws without the benefits of double taxation agreements.

Limited Life Company (LLC)

The Limited Life Company is a unique structure that combines characteristics of both partnerships and corporations. Its life duration is determined at the onset, and its dissolution can also be triggered by specific events. An LLC is ideal for investment projects or joint ventures with a defined timeline. It offers the limited liability feature of corporations while maintaining flexibility in terms of capital structure and profit distribution.

Société

Société, influenced by the French legal system, is similar to a partnership. It is a non-incorporated entity, and its participants, known as ‘sociétaires’, are liable for the entity’s debts up to the amount they have contributed. The Société is generally preferred by professionals, like lawyers or accountants, who seek a flexible yet formal structure to conduct their joint operations. However, its members don’t enjoy the limited liability protections afforded by other company types.

VAT in Mauritius

Value Added Tax (VAT) in Mauritius is levied at a standard rate of 15%. It applies to goods and services, with certain exemptions for essential commodities and specific sectors. Companies are required to register for VAT if their annual turnover exceeds a particular threshold.

Common questions