Disclaimer: 

This General overview has been obtained from Government Sources so: Is not our responsibility if any part of Local Legislation or Rules has been changed by Authorities without advice us.-

This overview is only for information and if wish to obtain more, please, consult directly to each Local Authority and/or Experts.-

Offshore business activities became a significant sector in Mauritius as from 1992, when the Mauritian Offshore Business Activities Act (MOBA Act 1992) came into force, bringing into being the Mauritius Offshore Business Activities Authority (MOBAA), which has been active and effective in structuring offshore regimes in various sectors.

Alongside this initiative, Mauritius began to offer a range of very attractive investment incentives. Initially the accent was mostly on employment creation in manufacturing rather than the development of a financial services centre; but this has gradually changed, and there is now a modern legislative structure for most of the main financial sector activities.

In 2001, under the Financial Services Development Act 2001 the government established a Financial Services Commission (FSC) and an Advisory Council. The FSC now monitor the country's stock exchange, offshore business activities and the insurance industry. It also supervises non-regulated or partly-regulated non-banking activities such as fund management, pension schemes and management, collective investment schemes, investment advisory services and leasing.

The Advisory Council helps guide the development of financial services in the country and act as an information centre to keep the industry in touch with the latest international trends.

In the new structure, MOBAA ceased to exist, and most existing laws bearing on offshore activities were replaced.

Due to its network of double tax treaties with most of the significant economies in its region, and above all with India, Mauritius is often chosen as a base by firms needing to set up an offshore holding or investment company, or trading subsidiary.

Mauritius has adopted a cautious attitude towards banking development, having admitted only 10 'Offshore Banking Units' (OBUs).

The legal and supervisory regime for OBUs is to be found in the Banking Act 1988, with amendments in the MOBA Act 1992, the Foreign Dealers Act 1994, the Finance Act 1998 and the Financial Services Development Act 2001. The Bank of Mauritius (the Central Bank) is responsible for licensing, regulation and supervision of the banking sector.

Offshore Banking means banking and investment banking business conducted in currencies other than the Mauritius rupee. OBUs may engage in fund administration and portfolio management, and offer treasury, custody and trust services.

OBUs, like Offshore Companies in general, can be formed as companies under the Companies Act 1984 (now the Companies Act 2001), or as branches.

The application process is fairly rigorous, and includes provision of audited financial statements for the past 5 years. The licensing processing fee is $3,000, and the annual license fee is $20,000.

Prudential ratios are agreed between the applicant and the Bank of Mauritius, but the minimum paid-up capital that must be maintained is MR50m (US$2m).

Until 2001, companies in Mauritius were formed under the Companies Act 1984, which was modelled on the English Companies Act 1948.

Companies may be limited by shares or by guarantee, or they may be unlimited.

Companies are incorporated by swearing a deed of incorporation in front of a notary, after the Registrar of Companies has approved the company's name. There has to be a local registered office where the company's books and records are kept, but this can be maintained by a professional firm.

There must be a minimum of two directors, and a secretary who must be a local resident. Audited annual financial statements and an annual return must be filed with the Registrar of Companies. Company formation takes between two and three weeks. Minimum authorised capital is MR 25,000, and annual registration fees vary between MR 4,000 and 8,000 depending on the amount of share capital.

The new Companies Act 2001 replaces most of the Companies Act of 1984, other than sections dealing with insolvency and public companies, which will remain in force until new legislation is brought forward in separate bills.
The Government's starting point for the new law was New Zealand company law, which is widely regarded among English-speaking jurists as representing the best available compromise between the various modern trends in corporate legislation, now that English law has been so influenced by EU law as to be no longer satisfactory as a model for common law jurisdictions.

The incorporation and management of Offshore Companies and International Companies, which were previously constituted under the separate International Business Companies Act 1994, have been brought under the Companies Act 2001.

Some key features of the new legislation are as follows:

The Act introduces a simple form of incorporation enabling a company to be incorporated on the filing of a single application together with the necessary consents from the proposed directors and secretary and a notice of reservation of the proposed company name. It will not be necessary to submit a constitution at the time of incorporation. If a company wants to depart from the standard requirements set out in the Actl, then, either on incorporation or subsequently, it needs to file a separate constitution setting out the departures from the standard form. The new legislation also recognises the reality of 'nominee' shareholders by allowing companies to operate with just one shareholder.

The Act does away with the need for a separate objects clause, and provides that a company has the rights, powers and privileges of a natural person; this incidentally removes the remains of the one-time ultra vires doctrine. This would not preclude a company from stating specific objects in its constitution if it wished to limit the capacity of a company in this way.

The Act replaces the Memorandum and Articles of Association by a single constitution, which is no longer required to be notarised.

Private companies continue to be prohibited from offering shares or debentures to the public, and are able to dispense with the holding of company meetings by passing resolutions by means of entry in the company minute book. Exempt private companies will not be required to appoint a qualified auditor or a qualified secretary and will be entitled to file only a summary statement of accounts with the Registrar.

The proposed legislation retains the distinction between exempt and non-exempt private companies in the same form as in the existing legislation.

The Act introduces no par value shares and permits a company to issue shares which are not designated with any monetary value.

The Act incorporates the new procedure of self-purchase and holding of treasury shares introduced by the Finance Act 1999.

The new legislation makes provision for a company to provide in its constitution for the company to have power to indemnify or insure its directors, secretary or employees in accordance with the limitations provided by the Act.

The Act contains a requirement that public companies and non-exempt private companies are required to prepare and present their accounts in accordance with international accounting standards and that exempt private companies are required to present their accounts in accordance with accounting practices and principles that are reasonable in the circumstances and having regard to any requirements set out in regulations made under the Act.

The old Companies Act required all companies to appoint an auditor but relieved exempt private companies from the requirement to appoint a qualified auditor. The new Act allows an exempt private company not to appoint an auditor (whether qualified or unqualified).

Offshore Companies are brought under the Companies Act and redesignated as "external companies". New provisions allow for the continuation in Mauritius of companies which are incorporated elsewhere and also provides for the incorporation of limited life companies.

A private company is one which says it is private in its constitution and which restricts the transfer of its shares, which cannot be offered to the public; there is a minimum of 1 and a maximum of 25 members.

A private company can be exempt or non-exempt: exempt companies are those which have issued share capital and reserves below MR 1m and turnover below MR 2m. Exempt private companies are required to present their accounts in accordance with accounting practices and principles that are reasonable in the circumstances and having regard to any requirements set out in regulations made under the Companies Act. (Exempt status is not available to offshore companies other than through the International Company form).

The Company Limited by Guarantee (the hybrid Company Limited by Guarantee and Having Shares is no longer permitted), may be used only for a non-profit organisation.

The liability of the members is limited to the amount they have undertaken to contribute to the company; there must be a minimum of MR 5,000 of guarantees.

A company incorporated outside Mauritius can register itself in Mauritius and will then be treated for most purposes as a Mauritius-incorporated company. Under the old legislation its status was properly that of a branch, but the new Companies Act provides for continuation under Mauritian law.

The following documents need to be provided to the Registrar:

Notarised Certificate of Incorporation and Constitution (Memorandum and Articles of Incorporation);

List of directors and details of the powers of local directors;

Particulars of registered office in Mauritius;

Names of two resident persons authorised to act on the company's behalf in Mauritius, and their declaration.

financial accounts have to be lodged with the Registrar within 3 months of the company's annual general meeting.

Direct ownership by foreigners of an onshore Mauritian company, or part of it, requires permission from the Prime Minister's Office, which is not automatic if the activity to be carried on is one which is in competition with Mauritian-owned companies

A company incorporated under the Companies Act 1984, or a registered branch of an overseas company, used to be able to apply for Offshore Company status under the Offshore Business Activities Act 1992, which varied some of the terms of the 1984 Act and set up the MOBAA (Mauritius Offshore Business Activities Authority) to supervise the offshore sector.

The 1992 Act listed the activities which MOBAA would approve:

Aircraft leasing and financing;

Authority approved activities;

International consultancy services;

International employment services;

International financial services;

International franchising and licencing

International management of assets;

International technology services including data processing;

International trading;

Offshore banking operations;

Offshore management of funds including pension funds;

Offshore insurance operations;

Shipping operations including ship management;

The operation of a headquarters.

Offshore companies have now been brought under the Companies Act 2001 and redesignated as 'external companies'. 

Offshore (external) companies may be 100% owned by non-Mauritians; but restrictions apply to Mauritian residents.

The business of an offshore (external) company must be conducted in foreign currency other than for day-to-day transactions; and offshore (external) companies must not do business in Mauritius, other than to take professional advice, employ local labour, and to rent property.

The International Company (IC) is the Mauritian equivalent of the International Business Company found in many offshore jurisdictions. It was established by the International Companies Act 1994, but is now constituted under the Companies Act 2001, in which it is known as a Category 2 Global Business Company.

An IC can take any of the forms permitted under the Companies Act 1984 (now the Companies Act 2001). Unlike the Offshore Company, the IC could issue bearer shares, and is not obliged to file annual accounts. Only one shareholder and one director are required, and there is no minimum capital. NB: The Finance Act 2000 removed the possibility of issuing bearer shares.

However, an IC is treated as non-resident, cannot get the benefit of Mauritius' double tax treaties, and cannot operate in the Free Port. Mauritian citizens are not permitted to own shares in an IC. There are a number of other restrictions on ICs; they may not:

Raise capital by public subscription;

Carry on banking or insurance business;

Own real property in Mauritius;

Own or manage a collective investment fund;

Provide nominee services, or provide trustee services to more than three trusts.

The Limited Life Company was introduced by the Offshore Business Activities (Companies) Regulations 1995.

This form is not available to onshore companies, but only to Offshore Companies and International Companies.

The Limited Life Company allows the dissolution of the company on the occurrence of specified events, and has the nature of a partnership under US tax law. It is often used for private fund management or investment purposes.

The Companies Act 2001 provides for Limited Life Companies, unlike the 1984 Act.

The general partnership in Mauritius is governed by the Code de Commerce and is known as the Societe en Nom Collectif.

Partners may be individuals or companies. In a general partnership, a partner's liability is unlimited. Under the Code de Commerce Amendment Act 1985, general partnerships can acquire offshore status.

The Finance Act 1996 further improved the situation of offshore partnerships, allowing them the benefit of Mauritius' double tax treaties.

The limited partnership in Mauritius is governed by the Code de Commerce and is known as the Societe en Commandite Simple. Partners may be individuals or companies.

A limited partnership consists of one or more general partners with unlimited liability, and one or more limited partners, who are liable only to the extent of their capital contributions. Under the Code de Commerce Amendment Act 1985, limited partnerships can acquire offshore status.

The Finance Act 1996 further improved the situation of offshore partnerships, allowing them the benefit of Mauritius' double tax treaties.

The status of sole trader is widely used in Mauritius, and is governed by the Code de Commerce.

The business name of a sole trader, who has unlimited responsibility for his liabilities, must be registered with the Registrar of Companies, if it is other than the name of the sole trader.

An annual return must be submitted to the Commissioner of Income Tax.

Mauritius Offshore Trusts are set up under the Trusts Act 2001 (they used to fall under the Offshore Trusts Act 1992); the regime for trusts is based on English common law.

Offshore trusts are subject to the following conditions:

The settlor must not at any time be a resident of Mauritius, although an offshore company can be a settlor;

At least one trustee must be resident in Mauritius; offshore companies (which are deemed to be resident) can be trustees if authorised by MOBAA;

Trust property must not include real property situated in Mauritius.

Trusts pay a one-time registration fee of $250; there are no disclosure or annual reporting requirements.

There used to be one main source of 'offshore' regimes in Mauritius, the Mauritius Offshore Business Activities Authority (MOBAA) constituted under the Mauritius Offshore Business Activities Act 1992 (MOBA Act 1992), which supervised almost all types of offshore entity other than banks, including the Free Port, and the Export Processing Zone.

In May 2000 Mauritius wrote a 'commitment letter' to the OECD in order to avoid inclusion on the OECD's list of jurisdictions which offer 'unfair' tax competition.

Partly as a result of this commitment, the Government passed a range of replacement legislation in 2001 including the Financial Services Development Act 2001, which set up a Financial Services Commission to replace MOBAA.

Most existing offshore legislation has been 'grandfathered' into the new regime.

Offshore operations may take place within the following forms:

Offshore Company

International Company

Limited Life Company

General Partnership

Limited Partnership

Offshore Trust

In addition, the Free Port, the Export Processing Zone and the Export Service Zone, whose occupants don't have to have offshore status as such, offer benefits broadly similar to those available to offshore companies;

Offshore Company pays corporate income tax at 15% (0% if it was incorporated before 1st July 1998). In fact it can opt to pay tax at any rate it chooses between 15% (or zero) and 35%, and will normally make this choice according to the rules governing 'controlled foreign corporations' in the country where its major shareholder is based. Legislation enacted in 2000 will remove the facility to choose tax rates from 2003.

Offshore Companies are also exempt from stamp duty, land transfer tax, and capital gains (morcellement) tax. The expatriate staff of offshore companies pay half the normal rate of personal income tax; two of them per company can import cars and household equipment free of customs duty.

There are no withholding taxes or equivalent deductions on dividends or other payments made by offshore companies to non-resident shareholders (residents aren't normally allowed to hold the shares of offshore companies).

Offshore Companies are regarded as being resident, and are therefore able to take advantage of Mauritian Doble Taxt Treatries.

The tax treaty with India is particularly favourable, and Mauritius is a favoured location for holding companies for those trading with or investing in India.

Offshore Companies can also utilise the unilateral foreign tax credit which is 90% of the Mauritian tax rate (leaving a residual liability of 10% of the Mauritian tax rate = 1.5% for offshore companies); legislation adopted in 2000 will reduce the credit to 80% of the Mauritian tax rate and it is likely that there will be further reductions before 2005, when Mauritius has committed itself to adhere to OECD guidelines for offshore centres.

Offshore Banking Units, Captive Insurers and Offshore Investment Funds, all of which have the Offshore Company as their basis, are taxed as for Offshore Companies in general. The same applies to Offshore Companies holding ships on the Mauritian Open Registry (this is the mandatory structure), but additionally, earnings from shipping operations are exempt from tax, the crew of the ships are exempt from payroll taxes, and materials, fuel, equipment etc for the ship are all free of customs and excise duties.

Can acquire offshore status under the Code de Commerce Amendment Act 1995; and under the Finance Act 1996 they are given access to Mauritian Doble Tax Treatries.

Offshore partnerships would normally have non-resident partners, and they are treated as companies for tax purposes, in a way that is analogous to the treatment of Offshore Companies (see above).

Are taxed in the same way as Offshore Companies.-
However, chargeable income is defined as the difference between (a) the net income derived by the trust; and (b) the aggregate amount distributed to the beneficiaries under the terms of the trust deed. Moreover, any amount distributed to non-resident beneficiaries is exempt from Income Tax.

An offshore trusts is allowed a credit for foreign tax on its foreign-source income. If no written evidence is presented to the Mauritius Commissioner of Income Tax showing the amount of foreign tax charged, the amount of foreign tax shall nevertheless be conclusively presumed to be equal to 90 per cent of the Mauritius tax chargeable with respect to that income. However, this deemed foreign tax credit of 90% will be reduced to 80% as from the year of assessment 2003/2004, which will be based upon the year of income ending June 30, 2003. 

An offshore trust may opt by written notice to the Mauritius Commissioner of Income Tax to be treated as non-resident in Mauritius for tax purposes, in which case it will not be subject to any income tax in Mauritius.

However, being non resident, the offshore trust may not benefit from Mauritius' extensive network of double taxation agreements.

The various forms of offshore entity in Mauritius are limited as regards the trading they can do in the jurisdiction, but not as regards the running of their businesses from Mauritius

The business of an offshore company must be conducted in foreign currency other than for day-to-day transactions; and offshore companies must not do business in Mauritius, other than to take professional advice, employ local labour, and to rent property.

Companies in the Export Processing Zone and the Export Services Zone are allowed, with permission, to conduct 10-20% of their trading domestically; but profits raised in this way will be taxed according to the normal domestic regime.