Doing Business in Mauritius – Key Considerations for business and investors

Mauritius is located in the South-West Indian Ocean, making it an attractive gateway between Africa and Asia.

With a population of 1.3 million, Mauritius has an estimated GDP growth rate of 3.8%, boasting one of the fastest-growing economies in Africa, backed by social and political stability.

Successive governments have continued to commit to a market-driven economy and encourage foreign investments. It is ranked first on the Ibrahim Index of African Governance 2020 and 13th on the World Bank’s Ease of Doing Business 2020 ranking.

General Considerations for Doing Business in Mauritius 

Entity Set up in Mauritius

A. Mauritius Global Business Company (GBC) 

The Mauritius Global Business Company is a type of entity generally reserved for foreign-controlled entities that intend to establish operations in Mauritius.

In 2016, Mauritius agreed to the global BEPS agreement, which relates to tax evasion, regulation, etc. This introduced an amendment to the Mauritian laws, which provides that all non-resident-controlled entities in Mauritius will be required to obtain a Global Business License if they wish to conduct business operations in the country.

The benefits of this company include expanding your consumer market and an abundance of employees.

• Minimum shareholders – 1 
• Minimum 2 directors (Residing in Mauritius) 
• Local corporate bank account 

B. Mauritius Authorised Company 

A Mauritius Authorised company is one whose operations and business control/management exist outside the country. For tax reasons, this entity is regarded as a non-resident.

Authorised entities will not be allowed to operate in the banking sector, provide trusteeship services, manage Collective Investment Schemes or provide registered office facilities to corporations.

They can operate in investment and property holdings, IT, international trade, marketing etc.

• Minimum shareholders – 1 
• Minimum 1 director (Can be foreign national) 
• Local corporate bank account 

C. Mauritius Limited Liability Partnership 

The limited liability partnership consists of characteristics of both corporations and partnerships. It consists of 2 or more partners whose personal liability is limited to the amount each partner invested into the entity.

This means that if the business is unsuccessful, creditors may not be allowed to attach any personal assets belonging to the partners.

Some advantages of establishing a limited liability partnership are that it allows for increased capital investment and less risk as it is spread between partners, individual skills and expertise, and it is a flexible business type.

The preferred partnership structure is usually the LLP since it has the features of a partnership but also provides the comfort that the partners' liabilities are limited to the extent of their contributions to the LLP.

However, the choice between an LP and an LLP will also hinge on the activities the latter will conduct.

• Minimum capital of USD 1 per partner 
• Minimum two partners (both can be foreigners) 
• It should have a resident manager 

D. Mauritius Limited Liability Company 

An LLC is a type of business entity similar to a partnership. However, its unique structure safeguards the owners from incurring personal liability for the entity's debts.

LLCs do not pay direct tax on profits. Instead, they pass profits to members, who are subsequently taxed individually. There is a restriction that banks and insurance entities cannot be LLCs; however, any other individual/entity can.

The regulation varies by State. Establishing an LLC will protect owners from personal liability and provide flexibility for investors. It is also fairly easy to do.

• Minimum shareholders – 1 
• Minimum 1 director (Residing in Mauritius) 
• Annual filing is mandatory 

E. Trusts

A trust is an arrangement for holding and administering property. The beneficial owner (known as the settlor) creates the trust and transfers property or legal rights to a trustee.

In turn, the trustee has a fiduciary obligation to hold or deal with the property for or on behalf of the beneficiaries in accordance with the trust objectives (known as a beneficiaries trust) or for certain purposes (known as a purpose trust).

A trust can have up to four trustees, one of whom must be a qualified trustee (i.e. a management company or a person resident in Mauritius and authorised by the FSC to provide trusteeship services).

The deed creating the trust must be in writing. A trust is liable to tax its chargeable income. Trusts are commonly used to preserve family assets and are substantially free from taxation.

Mauritius Tax Landscape  

The Mauritius economy relies heavily on tourism, exports, and financial services. In recent years, the country has been on an uptrend and is classified as an Upper-Middle-Income economy.

The tax landscape has drastically changed due to the pandemic and other social and political factors that have affected the economy. The government has introduced new tax measures, such as laws and guidelines, to combat these changes.

Due to the changes in the tax landscape, various measures have been introduced. One of the most significant changes is the reforms in the global business sector. From 2019 forward, a new Global Business Licence (GBL) replaces the old licence. The tax exemption that entities received under the previous licence (GBC1) is abolished.

The country has also introduced a new regulation from which entities can benefit. Companies that operate in deep sea exploration and use deep ocean water for air conditioning services and facilities will be tax-exempt for the next eight years.

There is also a reduced tax rate granted to entities that export goods. This rate of 3% is applied to exported goods.

 A. Corporate Tax  

This refers to the additional taxes businesses must pay based on their operations and certain government requirements. Companies are taxed based on their operations as well as any relevant tax laws.

Some examples of corporate taxes that may apply to your business include payroll taxes, stamp duty taxes, social security contributions (made by the employer), transfer tax, and digital services tax, along with any other taxes that apply based on operations (e.g., environmental tax).

• The employer’s contribution to the social security fund (CSG) will be determined by the employee’s salary. The contribution tax rate ranges between 3%, 4.5%, 6%, and 9%. There are additional contributions consisting of 2.5% (National Solidarity Fund) and 2.5% (Human Resource Development Council Levy).  
• The stamp duty amount ranges between MUR 25-1000 and is applied to every registered/inscribed document.  
• An additional encampment site tax is imposed on owners of encampment sites in specific zones (MUR 2-6 per square metre).

B. Customs and Excise Tax

This is a tax charged on products and services imported and exported in Mauritius. There is a distinction between customs and excise duties. Excise duties refer to the tax imposed by the government on certain goods for their production, licensing, and sale.

Excise duties apply to locally manufactured products, whereas customs are charged for imported goods. Customs and Excise duties are usually charged on luxury products, non-essential items (cosmetics or electrical equipment), and products consumed daily (alcohol, tobacco, etc.).

• Excise duties are applied to spirits, vehicles, and petroleum products.  
• Items imported into Mauritius are subject to customs duties, the rate of which is stipulated in the Customs Tariff Act.  

C. Pay As You Earn 

Pay As You Earn (PAYE) is a system under which employers are required to withhold tax from the emoluments of employees chargeable to tax at the time the emoluments are received by or made available to the employees.

To arrive at an employee’s chargeable income, an individual is entitled to deduct the appropriate Income Exemption Threshold from his or her net income based on the employee's number of dependents or other reliefs.

D. Exemptions and Reliefs

The following reliefs or exemptions may be claimed by an employee under the tax laws of Mauritius:

• exemption in respect of a dependent child pursuing an undergraduate course;

• deduction for household employees;

• interest relief on a secured housing loan;

• relief for medical insurance premiums or contributions;

• solar energy investment allowance;

• rainwater harvesting investment allowance; and

• deduction for contribution to the COVID-19 Solidarity Fund.

E. Green Economy and Taxation

The government is prioritising combating coastal erosion with extensive plans to rehabilitate beaches and coastline works. Decarbonisation plans will be pursued with the introduction by the CEB of prepaid charging stations for cars. With an estimated MUR 30bn needed to adapt and face the effect of climate change on Mauritius, the introduction of a Corporate Climate Responsibility Levy at 2% on profits for companies with turnover in excess of MUR 50m was nevertheless a surprise.

This measure will bring the actual total taxation of companies to 19% after considering corporate tax and CSR levies of 15% and 2%, respectively. This Climate levy will bring in some MUR 5bn, whilst corporate taxes will separately increase MUR 5bn year-on-year on improved company profits. VAT Revenue will rise by 17% to MUR 65bn.

F. Other information   

A new law (BEPS agreement) has also been passed by members of the G7, G20, and OECD, which establishes a new minimum tax rate of 15% for corporations conducting their business in specific countries.

The agreement aims first to tax foreign nationals who have highly profitable businesses subjected to pay tax in the country in which they have their operations (under Pillar One).

Secondly, a new standard corporate tax of 15% is introduced for bigger organizations and companies (annual revenue exceeds 750 billion euros) operating their business activities overseas (under Pillar Two).

The agreement aims to stop tax avoidance and be introduced before 2023.

Mauritius is presently a party to around 44 tax treaties, including with Botswana, Congo, France, Germany, Italy, Lesotho, Luxembourg, Madagascar, Mozambique, Namibia, Rwanda, South Africa, Swaziland, the United Kingdom, Zimbabwe and Uganda. In addition, a series of treaties are being negotiated.

Mauritius Legal Landscape

Mauritius has a ‘hybrid’ or ‘mixed’ legal system inherited from the French and British colonisation. The constitution of Mauritius is based on the Westminster model, while substantive law (civil rights, property law, contract law) is French-derived, and procedural laws are English-based.

Modern business laws, such as company, insolvency, and financial services laws, are modelled on Anglo-Saxon jurisdictions.

The government has recently enacted several pieces of legislation that have widely affected the corporate and financial sectors, including the National Payment Systems (Authorisation and Licensing) Regulations 2021.

The Bank of Mauritius (BoM) recently issued the National Payment Systems (Authorisation and Licensing) Regulations 2021 (Regulations), which became operational on 1 June 2021. The Regulations were issued two years after the National Payment Systems Act 2018 (NPS Act) was promulgated in January 2019.

The NPS Act sets the framework for regulating, overseeing and supervising payment systems in Mauritius and sparked the launching of the new National Payment System branded as MauCAS (Mauritius Central Automated Switch) by the BoM in August 2019.

In summary, the Regulations provide for the authorisation process of operators of payment systems, clearing systems, or settlement systems, the licensing of payment service providers, the form and manner of applying for an authorisation or a licence, and the applicable fee for obtaining an authorisation or licence.

Immigration Paths in Mauritius

Non-Mauritian citizens can choose to work, invest, live or retire in Mauritius through the relevant permits, namely, the Mauritius Business Visa, the Mauritius Work Permit (Occupation Permit), the Permanent Residence Permit, the Self-Employed Mauritius Occupation Permit and the Digital Nomad visa.

Additionally, non-citizens and ex-pats are allowed to acquire residential property in Mauritius under schemes approved and managed by the Economic Development Board, such as the Integrated Resort Scheme (IRS), the Real Estate Scheme (RES), the Property Development Scheme (PDS), the Smart City Scheme and Ground +2 apartments.

A. Mauritius Business Visa 

It doesn’t take too long to obtain a Mauritius business visa. Business visas are non-immigrant visas for persons wishing to enter Mauritius for business temporarily.

Depending on the purpose of the visit, and the timeframe visitors are planning to stay, this visa may suit your needs. This visa is only applicable for 90 days per 180 days (short-term visa).

Permitted Activities 

Various activities are permitted when granted a business visa. These include:

• Conferences 
• Seminars 
• Training courses or activities 
• Meetings 

Procedure

The application for the Mauritian business visa is as follows:

• You must fill out the application forms available online and initiate a case with Centuro for assistance. 
• The required documents must be completed and submitted to the relevant government authorities. 
• Applications and visas are processed in an average of five working days, provided all relevant documents are submitted. 

Timelines 

A business visa will take roughly three to five working days to process applications and issue a visa, provided all relevant documents are submitted.

B. Mauritius Work Permit (Occupation Permit) 

To be eligible for a work permit in Mauritius, the applicant should be between 20 and 60 years old. Exceptions to this requirement may be made for workers with specific expertise.

Foreign nationals will need a Residence Permit as well as a Work Permit to be employed in Mauritius legally.

This type of permit enables non-citizens to reside, retire, or open their own business in Mauritius, and it has also been extended for 3 to 10 years.  

Occupation permits issued in Mauritius should not be confused with work permits. An occupation permit is a combined work and residence permit that allows foreign nationals to live and work in Mauritius.

However, this permit is only available to applicants who fall under one of three subcategories:

• sponsored professionals 
• investors 
• and self-employed workers. 

C. Permanent Residence Permit 

It is a special category visa designed to attract foreign investment. The permanent residence permit is issued for ten years and is renewable, subject to the company's achieving a gross income of at least MUR4 million (approx. USD100,000) annually from the third year of registration.

The holder is entitled to work and live. Here are the two essential conditions to hold the Mauritius permanent residence permit:

• An investor with an occupation permit and a turnover of his/ her company exceeds 45 million Mauritian Rupees during any consecutive period of 3 years. 
• An investor desirous of investing at least US Dollar 500,000 in business activity stimulated by the Government of Mauritius, including Agriculture, Tourism, Banking, IT, and Financials. 

D. Self-Employed Mauritius Occupation Permit

To be eligible for this visa, you must work for yourself in a one-person business. Only people working in the service sector are eligible. The visa is valid for ten years. It is renewable if you can show that your business is successful.

To do this, you’ll need to show you made at least MUR 800,000 (around USD$20,000) per year. The first two years are excluded, as the government recognizes that starting a business takes time.

E. Digital Nomad Visa 

The Mauritius Digital Nomad Visa (Mauritius Premium Travel Visa) allows remote workers to live on the beautiful island of Mauritius. This visa is valid for one year but is renewable. If you intend to stay in Mauritius for six months or less, then you are granted a Tourist visa.

If you intend to stay for 12 months, then you need a Premium Visa, also known as a Digital Nomad Visa.

Procedure 

To apply for a visa, first check if you meet all the requirements. Then, head to the official EBD Mauritius Website and complete the form. The application is processed in about 48 hours.

Initiate a case for assistance.

Documents Required 

• Proof of Work: Your main place of business and source of income must be outside of the country. The government does not want you to compete or enter the Mauritius Labor Market. 
• Proof of Funds: Bank statement showing that you make a minimum of (MUR 23,000 | USD 1500) monthly. If you have dependents under the age of 24, this is an additional (MUR 7,500 | USD 500) per head. 
• Negative Covid Test: A certificate of a negative COVID–19 PCR test administered between 5 and 7 days before the date of boarding at the last point of embarkation. 
• Flights: A valid return air ticket to and from Mauritius 
• Accommodation: Where you’ll stay during your mandatory 14 days of quarantine and post-quarantine. 
• Travel Insurance for Mauritius: Use travel insurance while visiting Mauritius so you are covered for theft and medical expenses. There are a lot of fun things to do in Mauritius, and it’s best to have peace of mind while driving, hiking, and trying some of the best food in the world. 

Timelines  

It may take between 3 to 7 days for the application to be processed

Incentives for Doing Business in Mauritius

Mauritius offers numerous grants and incentives to investors, domestic and foreign alike. The noteworthy ones are set forth below:

A. Tax exemptions for entities in certain zones 

As Mauritius has many export processing zones, investors can take advantage of various incentives such as:

• exemption from corporate tax for up to 10 years 
• exemption of customs duties on certain products 
• Minimal regulation on foreign exchange

Mauritius is also preferred as it is 

• high on confidentiality 
• allows unrestricted repatriation of profits 
• has no controls on foreign exchange

Tax incentives on CIT and withholding tax exemptions

• Setting up a global business company in Mauritius is helpful as it offers 
• 3% corporate tax on global earnings 
• Absence of withholding tax on interest and dividends 
• It can provide services to local customers 

Corporate tax exemption for IP development entities

• Mauritius has favourable terms for several industries as it offers 
• An 8-year exemption from corporate taxes for companies engaged in the development of IP 
• Peer-to-peer lending businesses, as well as e-commerce businesses, can get up to a 5-year exemption from corporate taxes 

B. Access to a Large African Consumer Market 

The location of Mauritius is perfect for a business focused on African markets.

C. Low Corruption Levels

Low levels of corruption and low taxes make Mauritius an ideal country to set up a business.

D. Ease of Doing Business 

Mauritius is one of the most business-friendly countries on the African Continent. It has a strong framework for international business –  with free trade agreements in place (SADC, COMESA, CECPA, AfCFTA, Mauritius-China FTA), 29 Investment Promotion and Protection Agreements, and 45 tax treaties. There is:

• No exchange control; 
• no restriction on repatriation of profits/dividends,  
• No tax on dividends and capital gains tax 

E. Friendly Country 

Mauritius has a diverse ex-pat community with an English & French-speaking population. It is also one of the safest countries in Africa, with a stable political, economic, and tropical stability climate.

The country ranks 1st in Africa and 13th globally for Ease of Doing Business (World Bank’s 2020 report); the happiest country in Africa (World Happiness Report).

There are daily flights to the world’s major international airports, state-of-the-art private hospitals, and international schools.

Conclusion

We have the local knowledge to help you navigate all these processes. Whether you want to set up in Mauritius or just want to streamline your Mauritian operations, contact us for guidance, support, and expert advice.