Global Business Licence (GBL) companies
As of 1 January 2019, GBC1 companies will be renamed as GBL companies.
As of 1 January 2019, the deemed FTC regime available to GBC1 companies will be abolished and the following will apply:
- Introduction of an 80% exemption regime on the following income:
- No actual foreign tax credit is allowed on foreign-source income if the GBL company has claimed the 80% exemption.
The registration and application of GBC1 companies (GBLs as of January 2019) should be submitted to the FSC through a duly licensed Management Company on a prescribed form accompanied by the following:
- The certified supporting documents.
- The applicable processing fees and relevant fees.
A GBC1 company (GBL as of January 2019) is tax resident in Mauritius and may apply for a Tax Residence Certificate (TRC) from the Director General of the MRA should this be required by the tax authorities in the jurisdiction in which the company is conducting its business.
Investors may benefit from an extensive network of DTTs. Entities holding a GBC1 Licence (GBL as of January 2019) wishing to benefit from a DTT must obtain a TRC issued by the MRA.
A GBC1 company (GBL as of January 2019) is encouraged to have more substance in Mauritius by ascertaining the following:
- It has at least two directors, resident in Mauritius, of sufficient calibre to exercise independence of mind and judgment.
- It maintains, at all times, its principal bank account in Mauritius.
- It keeps and maintains, at all times, its accounting records at its registered office in Mauritius.
- It prepares, or proposes to prepare, its statutory financial statements and causes or proposes to have such financial statements to be audited in Mauritius.
In addition to the requirements mentioned above, when determining whether a corporation is managed and controlled from Mauritius, the Commission shall also consider whether a corporation meets at least one of the following criteria:
- The corporation has or shall have office premises in Mauritius.
- The corporation employs or shall employ on a full-time basis, at the administrative/technical level, at least one person who shall be resident in Mauritius.
- The corporation's constitution contains a clause whereby all disputes arising out of the constitution shall be resolved by way of arbitration in Mauritius.
- The corporation holds, or is expected to hold, within the next 12 months, assets (excluding cash held in a bank account or shares/interests in another corporation holding a Global Business Licence) that are worth at least 100,000 United States dollars (USD) in Mauritius.
- The corporation's shares are listed on a securities exchange licensed by the Commission.
- The corporation has, or is expected to have, a yearly expenditure in Mauritius that can be reasonably expected from any similar corporation that is controlled and managed from Mauritius.
The Financial Services Act has been amended to include the following conditions that should at all times be satisfied by a GBL company:
- The core income generating activities of the GBL should be in or from Mauritius.
- The GBL companies should employ, directly or indirectly, a reasonable number of qualified persons to carry out the core activities.
- The GBL companies should have a minimum level of expenditure proportionate to their level of activities.
- The GBL companies should be managed and controlled from Mauritius.
In order to benefit from the 80% partial exemption, a company may outsource any relevant activities to third party service providers, provided that:
- the company is able to demonstrate adequate monitoring of the outsourced activities
- the outsourced activities are conducted in Mauritius, and
- the economic substance of service providers is not counted multiple times by multiple companies when evidencing their own substance in Mauritius.
A GBC1 company can apply for a TRC to show substance in Mauritius. The TRC is generally issued within a period of seven days from the date of application, provided that the person has submitted the return required under the ITA 1995.
As of January 2019, Category 2 Global Business Licence (GBC2) will be abolished, and companies previously holding a GBC2 licence will need to apply for an authorisation from the FSC as an Authorised Company. An Authorised Company will be required to file a return of income to the MRA within six months of its year-end. However, an Authorised Company is still treated as a non-resident for tax purposes in Mauritius.
Only a management company shall act as the registered agent of an Authorised Company. An Authorised Company is a company conducting business outside Mauritius and can engage in activities other than the following:
- Financial services.
- Holding, managing, or otherwise dealing with a collective investment fund or scheme as a professional functionary.
- Providing registered office facilities, nominee services, directorship services, secretarial services, or other services for corporations.
- Providing trusteeship services by way of business.
An applicant for an Authorised Company must submit the following forms/documents to the FSC through a management company:
- The application form, duly filled in and signed.
- The certified supporting documents.
- The applicable processing fees and relevant fees.
The TRC is renewable on an annual basis and issued in two formats, one specific to India and one general for any other country.
Authorised Companies are required to file a return of income to the MRA within six months of its year-end.
Companies in the Freeport zone
Freeport operators and private Freeport developers will no longer be exempted from income tax. However, Freeport licences issued on or before 14 June 2018 will continue to benefit from the current tax exemption until 30 June 2021.
Effective as of the year of assessment commencing on 1 July 2020, Freeport operators or private Freeport developers engaged in the manufacture of goods will be liable to tax at the rate of 3% from sale of goods on local market, provided certain substance conditions are met.
Freeport operators will be liable to Corporate Social Responsibility (CSR) on local sales.
Income tax exemption for vessel owners
Owners of foreign vessels registered in Mauritius are exempt from income tax on income derived from the operation of such vessels, including any income derived from the chartering of such vessels. Owners of local vessels registered in Mauritius are also exempt to the extent that the income is derived from deep-sea international trade only.
An income tax exemption is available for companies set up on or after 1 July 2017 that are involved in innovation-driven activities for IP assets developed in Mauritius. The exemption will apply for eight tax years, starting from the tax year in which the company starts its innovation-driven activities.
Manufacture of pharmaceutical products, medical devices
An income tax exemption is available for companies set up on or after 8 June 2017 for the manufacture of pharmaceutical products, medical devices, and high-tech products by companies incorporated after 8 June 2017. This exemption also applies for eight tax years, starting from the tax year in which the company starts its operations.
Income derived from the exploitation and use of deep ocean water for air conditioning installations, facilities, and services will be exempted for eight tax years. Further, a company incurring expenditure on deep ocean water air conditioning may deduct from its gross income twice the amount of the expenditure incurred in that tax year. That deduction will be allowed for five consecutive tax years, starting from the year in which the expenditure is incurred.
Another tax exemption has been granted for interest derived by individuals and companies from debentures or bonds issued by a company to finance renewable energy projects (the issue must be approved by the Director General of the MRA).
If a company incurs expenditure in a tax year for the acquisition and setting up of a water desalination plant, it may deduct from its gross income twice the amount of the expenditure incurred in that tax year.
During a period from 1 July 2017 to 30 June 2022, if a person has incurred any qualifying expenditure on R&D as described below that is directly related to one’s existing trade or business, one may, in the tax year in which the qualifying expenditure was incurred, deduct twice the amount of the expenditure, provided that the R&D is carried out in Mauritius and no annual allowances have been claimed on the same.
The term ‘qualifying expenditure’ means any expenditure relating to R&D, including expenditure on innovation, improvement, or development of a process, product, or service as well as staff costs, consumable items, computer software directly used in R&D, and development and subcontracted R&D.
Export of goods
A reduced corporate tax rate has been introduced for exports of goods so that if, in a tax year, a company is engaged in the export of goods, it will be liable to income tax at the reduced rate of 3% on the chargeable income attributable to that export, as computed on the basis of the following formula:
Chargeable income attributable to that export = (A x C/B), in which:
- A is the gross income derived from the export of goods in that income year.
- B is the gross income derived from all the activities of the company for that income year.
- C is the chargeable income of the company for that income year.
Import of goods in semi knocked down form
Companies importing goods in semi knocked down form are entitled to an investment tax credit of 5% over three years (up to 30 June 2020) on the acquisition of new plant and machinery, excluding motor cars, are subject to a local value add of at least 20%. Tax credit will be available on investments up to 30 June 2020.
Foreign tax credits
Generally, double taxation is avoided by means of unilateral credit relief for foreign tax paid. The net amount of foreign income that has borne tax is grossed up at the foreign rate of tax, and the foreign tax paid is allowed as a credit against the Mauritius tax payable. However, the tax credit cannot exceed the Mauritius tax referable to the relevant foreign income. Unused credit is not refunded.
Regarding foreign income derived from countries with which Mauritius has DTTs, a tax credit is given for foreign tax in accordance with the treaties. There are clauses in the DTTs that provide that income arising from certain specified foreign sources is to be exempt from Mauritius tax.
Mauritius has signed DTTs with 44 countries (see the Withholding taxes section for a listing).
The following treaties await ratification: Gabon, Ghana, Jersey, Kenya, Morocco, Nigeria, and Russia.
The following treaties await signature: Cote d'Ivoire, Gibraltar, Malawi, and The Gambia.
The following treaties are being negotiated: Algeria, Burkina Faso, Canada, Czech Republic, Greece, Hong Kong, Lesotho, Mali, Montenegro, North Sudan, Portugal, Republic of Iran, Saudi Arabia, Spain, St. Kitts and Nevis, Tanzania, Vietnam, Yemen, and Zambia.
In the case of actual foreign tax credit claimed on foreign dividends, the general tax credit includes foreign tax imposed on the profits out of which the dividends are paid (underlying tax), provided that the shareholding in the foreign company is at least 5%.
Mauritius also allows a tax-sparing credit under its local tax legislation.