Mauritius: Reform in the global business industry
MAURITIUS: REFORM IN THE GLOBAL BUSINESS INDUSTRY
The Finance (Miscellaneous Provisions) Act 2018 (the “Finance Act 2018”) containing provisions for the implementation of measures announced in the Budget Speech 2018-2019 was passed by the National Assembly on 31 July 2018, and gazetted on 9 August 2018.
Summary of the relevant key amendments effective as of 1 January 2019:
New Authorised Company regime to replace GBC2 Companies
The Category 2 Global Business Companies (“GBC2”), a standard off-shore vehicle, not subject to tax in Mauritius, well suited for trading purposes, invoicing or holding of assets, is abolished. A new type of company, the Authorised Company, is being introduced on the same date, with the following main characteristics:
- The company shall obtain authorization from the Financial Services Commission (“FSC”) through a Mauritius management company;
- Business is conducted principally outside Mauritius & the company has its place of effective management outside Mauritius;
- The majority of shares/voting rights/legal/beneficial interest should be held or controlled by a non-citizen of Mauritius;
- Requirement to submit a tax return to the Mauritius Revenue Authority in order to be treated as non-resident for tax purposes & exempted from tax.
GBC1 regime renamed to GBC & additional substance requirements
The former brand know as Category 1 Global Business Company (“GBC1”), a typical on-shore company, qualifying for a Tax Residence Certificate and ideally suited for investments in countries with whom Mauritius has signed a double taxation agreement, is being renamed to Global Business Corporation (“GBC”).
The current tax facilities available to GBC1 companies, allowing to lower the effective tax up to 0% by means of foreign tax credit, is abolished and replaced by an income tax exemption of 80% on certain streams of income of the GBC, including:
• Foreign dividend, subject to amount not allowed as deduction in source country;
• Foreign source interest income;
• Profit attributable to a permanent establishment of a resident company in a foreign country;
provided that the FSC’s substance requirement criteria are met:
• Carry out its core income generating activities in, or from, Mauritius;
• Employ, either directly or indirectly, a reasonable number of suitably qualified persons to carry out the core activities;
• Have a minimum level of expenditure which is proportionate to its level of activities;
• Be managed and controlled from Mauritius; and
• Be administered by a Management Company.
• GBC1 and GBC2 companies with licences issued on or before 16 October 2017, will be able to continue under the provisions of the Financial Services Act 2007 until 30 June 2021.
• Licences issued after 16 October 2017 will be definitely abolished on 31 December 2018.
• As from 1 July 2021 / 1 January 2019:
• GBC 1 companies will be switched to GBC;
• GBC 2 companies shall comply with the requirements for a GBC if they want to be issued with a global business licence from the FSC, alternatively the GBC 2 will have to apply for
an authorisation from the FSC (new “Authorised Company” regime).
Should you require any further information or have any specific query on the above, you may contact our team: