What is a domestic company?

A domestic company is defined as a company incorporated under the laws of Mauritius and which can be either limited by shares, guarantee or both.  A domestic company requires either that the majority of its shareholdings be held by a citizen of Mauritius or that the majority of its business be conducted in Mauritius. The domestic company is governed by the Mauritius Companies Act 2001.

A domestic company can conduct various activities such as trading, consultancy services, investment holding, and property holding (IRS) amongst others.  The activities of the domestic company can be conducted with local as well as non-local residents of Mauritius.

Directors

A domestic company should have at least one resident director at the time of incorporation.

Shareholders

A minimum of 1 shareholder is required for the setting up of the domestic company.  The shareholder can either be an individual or a corporate body. 

Incorporation

A domestic company may be incorporated by the Registrar of Companies within 3 working days once all documents have been presented. Depending on the nature of the activity, a specific authorization (licence) may be required.

Required documents

Proper due diligence should be conducted and KYC documents received for all directors, shareholders, beneficial owners and signatories.  For an individual, these documents consist of:

• Certified copies of the passport (updated);
• Original or certified copy of a proof of address not older than 3 months;
• Curriculum vitae, and
• A reference letter (dated no more than six months) from a reputable bank having known the person for at least two years.

For a corporate shareholder, the documents to be submitted are the Certificate of Incorporation, Constitution (if any), Directors’ and Shareholders’ Register and most recent Financial Statements.

Taxation

A domestic company is liable to Mauritian income tax at the rate of 15%.  A partial exemption of 80% is available on the following specified income:

• Foreign source dividends derived by the company;
• Profits attributable to a foreign permanent establishment;
• Interest derived by a company;
• Income derived from ship/aircraft leasing;
• Income from the provision of specified financial services approved by the FSC;
• Reinsurance / Reinsurance brokering activities;
• Leasing and provision of international fibre capacity, and
• Sale, financing, arrangement, asset management of aircraft and its spare parts and aviation advisory services related thereto.

A domestic company which is involved in international trading activities shall be liable to income tax at a flat rate of 3%.
A domestic company must submit an annual tax return to the Mauritius Revenue Authority.   
VAT Registration is mandatory for a domestic company having an annual turnover exceedingMUR 6 million.

A domestic company needs to pay a Corporate Social Responsibility tax of 2% of its book profit towards programmes that contribute to the social and environmental development of the country.

A domestic company having gross income exceeding MUR 500 million in an accounting year or where the company forms part of a group of companies where the gross income of the group exceeds MUR 500 million, shall be liable to a Corporate Levy at the rate of:

(a)   0.3% of the annual gross income for insurance companies, financial institutions, service providers and property holding companies, and

(b)   0.1% of the annual gross income for other companies.

The Corporate Levy shall not apply to a company which operates in the tourism sector.

Accounting and Audit

A financial summary or statement, duly signed by at least 1 director has to be filed with the Registrar of Companies.

Only an annual financial summary is required if the company’s turnover is less than MUR 50 million.  Should the annual turnover exceed MUR 50 million, the company must submit audited accounts.

Global Business Company

A Global Business Company (GBC) is a resident company incorporated in Mauritius whereby the majority of its shareholdings are held by non-residents and which conducts business mostly outside of Mauritius. It enjoys benefits under the extensive Double Taxation Avoidance Treaties (DTAs) network of Mauritius. It is liable to pay tax at the rate of a maximum of 15% on all its income subject to the provisions of the DTAs. However, a company holding a Global Business Licence may benefit from a partial exemption of 80% which is applicable on foreign source dividends, interest, profits attributable to foreign permanent establishments, income from the leasing of aircraft and ships and the income from the provision of specified financial services as approved by the FSC, among others.

How To Benefit From The Partial Exemption ?

The following conditions should be satisfied in order to benefit from the partial exemption:

1. 1. Carry out its core income generating activities in, or from Mauritius by:
   2. 1. 1. Employing either directly or indirectly, a reasonable number of suitably qualified persons to carry out the core activities, and
         2. Having a indicative level of annual expenditure, which is proportionate to its level of activities;
   3. Be administered by a Management Company;
   4. Has at least 2 directors, resident in Mauritius, of sufficient calibre to exercise independence of mind and judgment
   5. Maintains, at all times, its principle bank account in Mauritius;
   6. Keeps and maintains, at all times, its accounting records, at its registered office in Mauritius;
   7. Prepares its statutory financial statements and causes such financial statements to be audited in Mauritius; and
   8. Provides for meetings of directors to include at least 2 directors from Mauritius.

A trading company engaged in international trading activities will pay 3% tax on its profit.

The main characteristics of a GBC are:

• Application for a Global Business Licence must be made through the Financial Services Commission (FSC).
• 2 Resident directors, secretary, and bank account in Mauritius are required.
• Audited accounts must be filed with FSC.
• Companies may claim for a partial exemption whereby tax will be payable at the effective rate of 3%.
• Where partial exemption is not available, companies will benefit from the current foreign tax credit system (for taxes suffered on foreign source income).
• A tax residency certificate has to be obtained in order to make use of double tax treaties.
• No withholding tax on payment of dividends and interests.
• No capital gains tax, estate duty or inheritance tax.
• No minimum capital required.
• Used mainly for holding investments in treaty countries.
• Substance requirements have to be met in Mauritius.
  

Authorised Company

Authorised Company (AC) is a type of company whose business activities and places of Management are outside of Mauritius. This implies that the company’s majority of shares, voting rights or legal or beneficial interests are shared or controlled by someone who is not a citizen of Mauritius. This type of company will be non-resident in Mauritius for tax purposes and as such does not have access to the network of Double Taxation Agreements in force in Mauritius.

Which Activities May be Done Through an Authorised Company?

The following activities may be done through an Authorised Company:

• Investment holding;
• Property holding;
• International trade;
• Management and consultancy;
• IT Services;
• Logistics;
• Marketing;
• Shipping and ship Management; or
• One-off transaction using a Special Purpose Vehicle.

However, as outlined in the Fourth Schedule to the Financial Services Act 2007, Authorised Companies are not allowed to perform the following activities:

• Financial services, including banking;
• Holding, managing, or dealing with a Collective Investment Scheme (or Fund) as a professional administrator;
• Providing registered office facilities, or nominee, directorship and secretarial services, or other services to corporations; or
• Providing trusteeship services.

Authorised companies are also prohibited to carry out any other activities that may damage reputation of Mauritius as an International Financial Centre (as determined by the FSC), or contrary to public interest.

The main characteristics of An Authorised Company are:

• It must be managed and controlled from outside Mauritius;
• It must have a Registered Office and Agent in Mauritius;
• Should submit an outline of the business objective and identity of the promoter, beneficial owner and ultimate beneficial owner to the FSC;
• Is allowed to have Corporate directors;
• Is not allowed to have bearer shares;
• Must file an annual unaudited financial summary with the FSC within six months of the balance sheet date;
• Must file annual tax return to the Mauritius Revenue Authority within 6 months of the balance sheet date; and
• Must keep accounting records, minutes and registers at the registered office or at such other place determined by the directors.

Trusts

A trust is a fiduciary relationship in which one party, known as a Settlor, gives another party known as the Trustee, the right to hold title to property or assets for the benefit of third party, the Beneficiaries. 

Trusts in Mauritius are governed by the Mauritius Trusts Act 2001, which allows for life interest / contingent interest trust, protective or discretionary trust, employee benefit trust, charitable trust, purpose trust or foreign trust.

Main advantages of a Trust:

• Gives the Settlor the requisite protection and comfort for a long-term wealth management under the Trust. Family assets are preserved over generations with most tax efficiency, succession laws, forced heirship rules, probate and other hurdles are avoided. Once a Trust is set up it can own companies to own and manage any family business or wealth.
• It is not required to be registered anywhere thus providing confidentiality. A Trustee may register the Trust with the Registrar General to receive a “date certaine” which is registering the date of creation of the Trust.
• Proper law may be chosen by the Settlor.
• Possibility for the Settlor to leave on or before his death letters of wishes.
• Anti-forced heirship rules
• Recognition of Purpose Trusts
• Possibility to accumulate income for any period during the duration of the trust
• No disclosure of the trustees’ deliberations, the name of the Settlors and the Beneficiaries unless the latter is a Mauritian resident or a body corporate resident in Mauritius
• Trusts not being void or voidable due to the insolvency of Settlor or proceedings against him or latter being declared bankrupt. However, such trust may be void if the creditors prove beyond reasonable doubt that the intention of the Settlor at the time of the creating the trust was to defraud him.
• Trust can apply for a Global Business Licence and benefit from double taxation treaties.
  

Foundations

A Foundation is a hybrid legal entity combining the features of a trust and a company. Foundations are interesting to clients who may be unfamiliar with the concept of Trusts, particularly in civil law countries.

Foundations in Mauritius are governed by the Mauritius Foundations Act 2012 (the ‘Foundations Act’) and managed by the Foundation Council which carries out the objectives and purposes of a Foundation. A Mauritius Foundation is required to be registered and issued a certificate of registration by the Registrar of Companies.

What Are The Advantages Of A Foundation?

Main advantages of a Foundation:

• Wealth protection
• Private relationship
• Being recognised in all common and civil law jurisdictions
• Holding assets which can be passed on from one generation to the next (estate planning)
• Minimizing estate taxes or other inheritance taxes
• Avoidance of forced heirship rules
• Maintenance of corporate control
• Separation of voting and economic benefits
• Charitable purposes
• Used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements

Every Mauritius Foundation shall have:

• A management company or be such other person resident in Mauritius as may be authorised by the Financial Services Commission.
• A Registered Office in Mauritius.
• A Foundation Council which shall administer the property of the Foundation and carry out the objects of the Foundation. A Foundation Council shall have at least one member who shall be ordinarily resident in Mauritius.

• A name ending with the word “Foundation” or a word in a foreign language which has the same meaning as the word “Foundation.
  

Limited Partnership

A limited partnership may be set up in Mauritius to carry on any lawful business in Mauritius and/or from Mauritius with persons outside Mauritius, with a view to making profits. This structure combines the features of both a company and a partnership.  It offers a flexible vehicle that is suited to carry out investment activities.   It must have at least one general partner who is liable for all debts and obligations of the partnership and at least one limited partner who is liable for debts and obligations only up to the maximum amount of his commitment.  General partners may elect for the limited partnership to have a legal personality. 

Limited partnerships in Mauritius are governed by the Limited Partnerships Act 2011.  There must be a partnership agreement that is binding upon the partners, setting out the affairs of the partnership and the conduct of its business.

An application for the set up of a domestic limited partnership is made to the Registrar of Limited Partnerships in Mauritius.  Where a limited partnership conducts a major part of its business outside Mauritius, it shall submit an application to the Financial Services Commission for a Global Business Licence.  A limited partnership is required to have its registered office and a registered agent in Mauritius and a Management Company where it holds a Global Business Licence.

Protected Cell Company

A Protected Cell Company (PCC) is a Special Purpose Vehicle that is a single legal entity comprising a core cell and several non-core cells.  The assets and liabilities of each cell are legally separate from the assets and liabilities of any other cell and are hence legally protected from the failure of the other non-core cell. 

PCCs in Mauritius are governed by the Protected Cell Companies Act 1999 and are widely used by collective investment schemes and closed end funds, insurance businesses, external pension schemes and private equity companies for the following main reasons:

• An indefinitenumber of cells can be established;
• Simplifies administration and reduces the costs of operation;
• Regulatory compliance is for one legal entity, and
• Ring-fencing of risks and losses, among others.

The PCC allows for more security and flexibility for international investment structuring.

A PCC may be set up as a newly incorporated entity, conversion of an existing company into a PCC or continuation of a company incorporated in a foreign jurisdiction being registered as a PCC to conduct activities in Mauritius, provided it satisfies the requirements as prescribed in the Companies Act 2001 and the Protected Cell Companies Act 1999.

A Protected Cell Company is liable to income tax as a single legal entity at the rate of 15%. However, for a Global Business Company, certain categories of income such as dividends from foreign sources and interest from foreign sources, are subject to an 80% exemption.  In this context, the effective rate on these incomes does not exceed 3%.

The Variable Capital Company

The concept of Variable Capital Companies (VCCs) was first introduced by the Minister of Finance in his budget speech of financial year 2020- 2021.

A VCC is a new product being added to the list of products proposed by the Mauritian financial sector.  The VCC is an entity incorporated under the Companies Act 2001 and which carries out its activities through a single fund, various sub-funds, and/or Special Purpose Vehicles (“SPVs”), within the same entity, facilitating the segregation and ring-fencing of assets and liabilities of each of the sub-entities.  A VCC needs to be authorised by the Financial Services Commission (the “FSC”) as a VCC Fund according to the Variable Capital Companies Act 2022 (“VCC Act”).

The VCC provides greater flexibility and efficiency by streamlining management and operations by way of a single entity.  VCCs provide a lot of flexibility for various kinds of investments and can be useful in setting up private equity businesses, open or close-ended investment funds and special funds such as hedge funds and venture capital funds.  VCCs may also be used for multi-family offices, which are currently being incorporated as protected cell companies (PCCs), as they provide greater flexibility in that the sub-funds may have a distinct legal personality, and the kind of services being provided by a VCC is not restricted by law.

The FSC can approve the operation of a sub-fund as a Collective Investment Scheme (“CIS”) or a Closed-End Fund (“CEF”). The fund manager of a VCC can thus, under one single entity, manage a collective investment scheme sub-fund and a closed-end sub-fund. There is no restriction on the number of sub-entities that can be created under a VCC structure, although the creation of a sub-entity requires the prior approval of the FSC.

A VCC is governed by the VCC Act but is incorporated under the provisions of the Companies Act 2001 and is required to comply with all the provisions of the Companies Act 2001 that are not expressly excluded under the VCC Act.

A VCC is now added to the definition of ‘financial institution’ under the Financial Intelligence and Anti-Money Laundering Act and a VCC has to fully comply with the AML/CFT laws of Mauritius.

Types of sub-funds that can be operated by a VCC Fund

• The sub-fund of a VCC fund may operate as a CIS or a CEF of any category, subject to the approval of the FSC.
• It may elect to have a separate legal personality from that of the VCC fund.  For example, the sub-fund can be approved to operate as a CIS and an Expert Fund.  It will be required to comply with all the relevant Acts, Rules and Guidelines as applicable (Financial Services Act (the “FSA”), Securities Act, Securities (Collective Investment Schemes and Closed-End Funds) Regulations 2008, relevant FSC Rules and Guidelines applicable to a/an CIS/Expert Fund).  
• The sub-fund of the VCC Fund can also act as a Feeder Fund or a Master Fund.  The feeder fund is a fund that pools investment capital and invests it into a master fund. The master fund invests in the market, makes portfolio investments, and trading in securities. An investment advisor, in turn, handles all the investments.

Features of a VCC:

• Set up: A company already incorporated in Mauritius may be converted into a VCC and a company incorporated in a foreign jurisdiction may be redomiciled to Mauritius as a VCC.
• Sub-entities: There is no limit to the number of sub-entities that can be created by a VCC under the VCC Act. However, the creation of any sub-entity requires the prior approval of the FSC. An SPV established by a VCC is not permitted to operate as a fund but instead is required to operate as an ancillary vehicle to the VCC or a sub-fund of the VCC.
• Directors: Unless otherwise stipulated, the directors of the VCC shall be the directors of each of its sub-funds or special purpose vehicles. The VCC can also appoint different directors for each sub-entity, if its constitution permits, providing for a flexible management structure.
• Record keeping: A VCC is required to maintain additional records in respect of each of its sub-entities  by following the VCC Act. The records must sufficiently explain the transactions and financial position of the VCC and its sub-entities. 
• Segregation of assets: Setting up a VCC provides the benefit of segregation of assets and liabilities of each of its sub-entities: The VCC Act provides that the assets of a particular sub-entity cannot be used to discharge the liabilities of another sub-entity. Every asset attributable to a sub-entity can only be made available to the creditors of the VCC who are creditors in respect of that sub-entity, and as such will be protected from other creditors of the VCC, irrespective of whether a creditor is a statutory, regulatory, or government body.
• Activities to be conducted by a VCC: There is no restriction on the types of activities that can be conducted by a VCC, as compared to, for example, a PCC, which can only conduct such activities as are provided for under the Protected Cell Companies Act 2000 of Mauritius.
• Where required, a sub-fund may appoint its own CIS Manager, CIS administrator, custodian, or other service provider or a VCC can appoint one CIS Manager, CIS administrator, custodian, or other service providers for all its sub-funds.
• A VCC can share its board of directors with the boards of its sub-funds.
• A single money laundering reporting officer or compliance officer can be appointed for all sub-funds.
  

The International Business Company in Seychelles is an alternative to the Mauritian offshore company known as the Authorised Company and to the other offshore companies established in jurisdictions such as the British Virgin Islands (BVI).

The IBC is a company with limited liability, whose activities are governed by the Seychelles International Business Authority (SIBA).  It is considered a company that is non-resident for tax purposes and is hence exempt from any kind of taxation.   

The IBC must conduct its activities out of Seychelles and it cannot hold real estate properties in Seychelles.  The IBC cannot benefit from Double Taxation Agreements (DTAs) either.

The IBCs are normally used for trading, invoicing and property holding activities.  They are however prohibited from engaging in banking, insurance, reassurance and fiduciary activities.

The key characteristics of an IBC are:

• Incorporation of the IBC in Seychelles: 1-3 days
• Local directors are not mandatory.
• The Director can be a natural person or a legal entity.
• ‘Shelf-companies’ are available.

Bookkeeping is not mandatory.  However, accounting records should be kept for at least 7 years and should be provided to the Seychelles Registered Agent to be kept at the registered address of the Company